Nickel Jumps Most in Three Month on Indonesian Supply Concerns

Jan 10, 2014 2:41 pm ET

Jan. 10 (Bloomberg) -- Nickel prices surged the most in three months in London on a report that Indonesia, the world’s biggest producer of the metal from mines, detained Chinese ships as a ban on ore exports approaches.

Indonesia prevented at least 10 Chinese ships from leaving port, the 21st Century Business Herald newspaper reported. The Southeast Asian country is scheduled to bar shipments of unprocessed ores after Jan. 12 to bolster local processing. The move comes amid signs of stronger demand in China, the biggest consumer.

“The shipping issue is part of the equation,” Michael Turek, a senior director at Newedge USA LLC in New York, said in an e-mail. “Chinese imports of industrial raw materials are rising.”

Nickel for delivery in three months climbed 3.8 percent to settle at $13,860 a metric ton at 5:50 p.m. local time on the London Metal Exchange, the biggest gain since Oct. 4.

Indonesian ore accounts for at least 60 percent of nickel sold into China, and the export ban “has the potential to be a big market-mover,” David Wilson, director of metals research and strategy at Citigroup Inc. in London, told Bloomberg Brief.

Copper for delivery in three months gained 1.2 percent to $7,302.50 a ton ($3.31 a pound). In New York, futures for March delivery rose 1.3 percent to $3.3415 a pound on the Comex.

Imports of copper by China in December rose 29 percent to 441,291 tons from a year earlier, government data showed today. Stockpiles tracked by the LME declined for the 47th straight session, the longest slump since 2004, to 343,875 tons, the lowest in 12 months.

Inventories may continue to shrink in the first quarter, said David Lilley, co-founder of Red Kite Group, whose metals fund returned more than 50 percent last year.

The outlook for the metal has turned positive amid prospects for global economies to strengthen, he said yesterday in a telephone interview from London.

Aluminum, zinc, lead and tin rose today on the LME.

--With assistance from Anne Riley in New York and Maria Kolesnikova in London. Editors: Patrick McKiernan, Joe Richter