Nickel rises on concerns over supply via Hormuz

SINGAPORE: Nickel rose nearly 2% on Thursday as concern over disruptions to traffic through the Strait of Hormuz raised fears of sulphur supply shortages, threatening a key raw material for production.

Benchmark three-month nickel on the London Metal Exchange climbed 1.83% to $17,110 a metric ton by 0300 GMT.

The most-traded nickel contract on the Shanghai Futures Exchange was up 2.01% at 131,640 yuan ($19,455.53) a ton.

“Sulphur supply tightness expectations are fermenting again.

For nickel, this mostly means an upward shift in cost expectations for high-pressure acid leaching process,“ analysts from Chinese broker Jinrui Futures said in a note, referring to a process used to extract nickel from ore.

Indonesia, the world’s biggest nickel producer, relies on the Middle East for about 75% of the sulphur used in sulphuric acid for leaching metal from ore.

US and Iranian blockades of the Strait of Hormuz and military operations have disrupted shipments through the vital shipping corridor.

Copper was steadier, helped by weaker US inflation data and hopes of a more dovish Federal Reserve stance.

It was also supported by supply worries and withdrawals from LME warehouses.

The metal rose 0.17% in London and dipped 0.28% in Shanghai.

US producer prices posted their biggest decline in 14 months in June, data released on Wednesday showed, adding to a string of US reports that have cooled expectations for Federal Reserve interest rate hikes. Lower borrowing costs can support metals demand because they tend to help economic activity.

Among other LME metals, aluminium rose 0.43%, zinc gained 0.58%, lead added 0.35% and tin dipped 0.15%.

On the SHFE, aluminium dipped 0.13%, zinc lost 0.87%, lead dipped 0.1% and tin dropped 1.67%.