Nickel Rises to 11-Week High as Goldman Boosts Price Forecast

Jan 21, 2014 2:11 pm ET

Jan. 21 (Bloomberg) -- Nickel rose to an 11-week high after Goldman Sachs Group Inc. boosted its price forecast as the export ban on unprocessed ore in Indonesia, the world’s top producer from mines, triggered mounting supply concerns.

The bank boosted its 12-month price estimate 6.7 percent to $16,000 a metric ton and said nickel was among its top three bullish metal picks for 2014. The global production surplus will narrow to 9,000 tons this year from 142,000 tons in 2013, and the market will swing to a deficit of 51,000 tons next year, Goldman analysts including Christian Lelong said today in a report. The ban in Indonesia started Jan. 12.

“The nickel market outlook hinges, like never before, on developments in Indonesia,” Goldman said. “We now expect that the marginal cost of nickel supply will rise sharply as a result of the recent ban on unprocessed ore exports from Indonesia, with the potential for a shortage of nickel ore in late 2014 and 2015 significant.”

Nickel for delivery in three months gained 1.2 percent to settle at $14,725 a ton at 5:51 p.m. on the London Metal Exchange. Earlier, the price reached $14,755, the highest since Oct. 30.

This month, nickel has climbed 5.9 percent, the most among the six main metals on the LME.

Today, the International Monetary Fund raised its forecast for global economic growth this year to 3.7 percent from an October estimate of 3.6 percent.

The worldwide outlook may bolster demand for industrial metals, Phil Streible, a senior commodity broker at R.J. O’Brien & Associates LLC in Chicago, said in a telephone interview.

Copper for delivery in three months gained 0.3 percent to $7,339 a ton ($3.33 a pound) on the LME. On the Comex in New York, futures for March delivery rose 0.2 percent to $3.351 a pound.

In London, zinc and lead advanced, while aluminum and tin declined.

--With assistance from Alfred Cang in Shanghai and Maria Kolesnikova in London. Editors: Joe Richter, Millie Munshi