Nickel Extends Longest Rally Since 2010 Amid Supply Concerns

Apr 10, 2014 2:45 pm ET

April 10 (Bloomberg) -- Nickel extended its longest rally since October 2010 in London on mounting concern that global demand will exceed supply after Indonesia, the world’ biggest supplier of mined metal, barred unprocessed-ore exports.

Inventories, which haven’t posted a monthly decline since June 2012, dropped in seven of the eight sessions in April. OAO GMK Norilsk Nickel, the top producer, said demand may exceed supply as early as next quarter. Prices have gained 23 percent since the ban took effect on Jan. 12, even as an index of the six main metals traded in London fell 1.7 percent.

“Nickel is up because of those export restrictions in Indonesia,” Michael Smith, the president of T&K Futures & Options Inc. in Port St. Lucie, Florida, said in a telephone interview. “I think industrial metals have bottomed and prices will move higher.”

Nickel for delivery in three months climbed 2.3 percent to settle at $17,080 a metric ton at 5:50 p.m. on the LME, a ninth straight gain and the longest rally since Oct. 6, 2010. Prices rose as much as 3.2 percent to $17,226, the highest since March 2013.

The global market will fall into a deficit of 28,000 tons by the fourth quarter, Macquarie Group Ltd. said yesterday.

Nickel stockpiles monitored by the LME fell 0.4 percent to 278,844 tons, the lowest since March 19, and are down 2.1 percent this month, exchange figures showed. Orders to remove the metal from warehouses gained 0.5 percent to 133,200 tons.

Copper for delivery in three months advanced 0.6 percent to $6,655 a ton ($3.02 a pound) on the LME. On the Comex in New York, futures for delivery in May rose 0.3 percent to $3.045 a pound.

China’s imports of unwrought copper and copper products rose 11 percent to 420,000 tons in March from a month earlier, customs data showed today. In-bound shipments rose partly on demand for copper as collateral in financing agreements, said Li Ye, an analyst at Shenyin & Wanguo Futures Co. in Shanghai.

Aluminum climbed for a third day to a five-month high on the LME. Zinc, lead and tin also gained.

--With assistance from Jae Hur in Tokyo.