Nickel Climbs 14-Month High as Russia Tensions Fuel Supply Woes

Apr 23, 2014 1:51 pm ET

April 23 (Bloomberg) -- Nickel advanced to the highest in more than a year in London amid mounting supply concerns as tensions escalated between Ukraine and Russia, the second- largest producer of the refined metal.

The government in Kiev said it’s resuming operations to oust militants from eastern cities, while Russia pledged to defend its citizens in the neighboring country. White House spokesman Jay Carney said a decision to impose additional penalties on Russia may be made in the “coming days.” Demand was already expected to exceed supply after Indonesia, the biggest source of the metal from mines, banned ore exports.

“There’s an increasing probability of sanctions against Russia,” Bart Melek, the head of commodity strategy at TD Securities in Toronto, said in a telephone interview. “We’re not quite sure what form that might take, but it represents risks to supply. And we also have this Indonesian issue.”

Nickel for delivery in three months gained 0.3 percent to settle at $18,380 a ton at 5:51 p.m. on the London Metal Exchange, after reaching $18,525, the highest since Feb. 6, 2013.

In China, the largest user, nickel pig-iron prices have gained more than 20 percent this year, as ore supply tightened on lower shipments from Indonesia, Citigroup Inc. said. Nickel pig iron is a cheaper alternative to refined metal.

Demand will exceed supply by 30,000 tons on Indonesia’s ban, Toru Higo, the general manager of nickel sales and raw materials at Sumitomo Metal Mining Co., said in an interview on April 21. That will be the first deficit since 2010, he said.

Copper for delivery in three months was unchanged at $6,670 a ton ($3.03 a pound). Lead was also unchanged in London. Tin rose, while aluminum and zinc fell.

On the Comex in New York, copper for delivery in July climbed 0.2 percent to close at $3.0395 a pound.

--With assistance from Jae Hur in Tokyo and Maria Kolesnikova in London.