Nickel nears seven-year high as market frets about supply

  • Nickel on the LME traded up 3% at $19,975 a tonne in official rings, representing a 9% gain since the middle of August
Updated 17 Sep, 2021

LONDON: Nickel prices climbed towards seven-year highs on Friday as supply fears resurfaced after an Indonesian government official said the country was looking at taxes on exports of the stainless steel ingredient.

Benchmark nickel on the London Metal Exchange (LME) traded up 3% at $19,975 a tonne in official rings, representing a 9% gain since the middle of August. Prices of the metal used in electric vehicle batteries touched $20,705 a tonne last week, its highest since May 2014.

"Inventories are low, demand is stronger than expected and supplies haven't kept up. The idea of Indonesia imposing export taxes just adds to the mix," one nickel trader said.

Copper drifts lower as focus turns to US Fed meeting

Indonesia: Investment minister Bahlil Lahadalia said Indonesia is exploring the possibility of levying an export tax on nickel products with less than 70% nickel content to drive expansion of the country's domestic processing industry.

Inventories: Stocks of nickel in LME-registered warehouses have dropped 35% since April to 171,714 tonnes.

Cancelled warrants -- metal earmarked for delivery -- at 35% and one company holding large amounts of warrants are also fuelling concern about a tight LME market.

This pushed the premium for cash metal over the three-month contract to $32 a tonne, up from $15 at Thursday's close.

Nickel hits highest since 2014 as stockpiles dwindle

Aluminium: Prices of the metal used in the transport and packagaing industries are trading near 13-year highs on expectations that accelerating production cuts in China to control emissions will create large shortages this year.

"China needs to balance the environment against the economy. If push comes to shove, I would say China will always lean towards the economy," said Julius Baer analyst Carsten Menke.

High prices have also been bolstered by concerns about disruptions in Guinea, which has large reserves of bauxite used to make aluminium feedstock alumina.

Three-month alumnium was up 1.6% at $2,926.5.

Other Metals: Copper gained 0.9% to $9,455 a tonne, zinc advanced 1.3% to $3,121, lead slipped 0.2% to $2,205 and tin was up 0.6% at $34,240.

Read Comments