Nickel jumps as Indonesia supply worries resurface
- Benchmark nickel was up 1.8% at $18,900 a metric ton
LONDON: Nickel prices rose on Tuesday as worries about supplies from Indonesia resurfaced after China’s Tsingshan Group asked smelters at its Weda Bay industrial park to divert power to aluminium production.
Benchmark nickel was up 1.8% at $18,900 a metric ton at 0946 GMT. It hit a near two-year high at $20,000 earlier this month, with buying triggered by lower ore quotas in top producer Indonesia and an acute sulphur shortage stemming from the Iran war.
Tsingshan made the request to curb output last week to producers of nickel pig iron, used to make stainless steel, Reuters reported on Monday, as the group shifts focus to aluminium after stronger prices helped improve margins. Both NPI and aluminium smelting consume large amounts of electricity.
Traders said reports that Indonesia had suspended nickel mining licenses after companies failed to submit required 2026 plans had created further momentum.
Aluminium prices trading near four-year highs have been propelled higher by disrupted supplies from the Middle East, which houses 9% of global smelting capacity.
Weak China data pushes copper to one-week low
The closure of the Strait of Hormuz has also stalled shipments of aluminium to the United States and Europe and prevented feedstock from being delivered to Middle East smelters.
“Events in the Middle East have removed >4% of global aluminium supply, with damage to facilities bringing an extended, 12-month, restart timeframe for a large share of this,” Morgan Stanley analysts said in a note.
“With China hitting its smelting capacity cap and tight power markets constraining supply elsewhere, this pushes the market into a 1.85 million ton deficit for 2026 on our estimates.”
Shortages are behind the withdrawal of aluminium from LME registered warehouses and the large backwardations or premiums for nearby LME contracts against those with longer maturities.
Three-month aluminium was up 0.8% at $3,597 a ton, copper slipped 0.8% to $13,474 a ton, zinc gained 0.1% to $3,528, lead ceded 0.6% to $1,970 and tin retreated 0.4% to $52,375.
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