Nickel Rises Most Since 2012 on Deficit Forecast; Copper Climbs

May 19, 2014 4:19 pm ET

May 19 (Bloomberg) -- Nickel jumped the most since 2012 as OAO GMK Norilsk Nickel, the world’s largest producer of refined metal, said the global market will swing to a deficit next year. Copper in London rose to a 10-week high.

The global nickel surplus will drop to a four-year low in 2014, Norilsk said today. Demand will exceed output through 2019 as consumers seek to replace supplies from Indonesia, the world’s largest producer from mines, after the government barred exports of raw ore in January, Macquarie Group Ltd. said last week. On May 13, the price surged to a 27-month high and tumbled 11 percent in the following two sessions.

Last week’s “pullback in prices presents a solid buying opportunity,” Goldman Sachs Group Inc. analysts including Max Layton said in a report. “Our overarching view on nickel is that prices will first need to rise in order to incentivize a substantial build out of smelter capacity in Indonesia.”

Nickel for delivery in three months climbed 5.7 percent to $20,100 a metric ton by 9:18 p.m. on the London Metal Exchange, the biggest gain since Sept. 14, 2012. On May 13, the price reached $21,625, the highest since February 2012.

Goldman affirmed its forecast that prices will rally to $22,000 over the next three to six months. Through May 16, nickel climbed 37 percent this year.

Copper gained 0.9 percent to $6,925 a ton ($3.14 a pound). Earlier, the price reached $6,954, the highest since March 7. Stockpiles monitored by the LME have slumped 50 percent this year to 183,050 tons, the lowest since September 2008.

On the Comex in New York, copper futures for July delivery rose 0.6 percent to $3.167 a pound.

Aluminum, tin, lead and zinc gained in London.

--With assistance from Yuliya Fedorinova in Moscow.