Nickel Caps Biggest Two-Day Gain in Five Weeks After Mine Shuts

Aug 07, 2014 2:23 pm ET

Aug. 7 (Bloomberg) -- Nickel posted the biggest two-day gain in five weeks after a mine in Papua New Guinea suspended operations, heightening concern that supply will trail demand.

Mining at Ramu NiCo’s site was halted after an attack by armed villagers that injured five workers, The Australian reported. Refined-nickel consumption will exceed supplies by 97,100 metric tons next year, according to Morgan Stanley. Prices have climbed 36 percent this year after Indonesia, the biggest nickel-mining nation, banned raw-ore exports in January.

“In terms of pure fundamentals, this closure at a marginal facility should have little or no impact, but in the world of sentiment, any further perceived curtailment in available supplies is likely to push prices higher,” Michael Turek, a senior director at Newedge USA LLC in New York, wrote in an e- mail.

Nickel for delivery in three months increased 0.9 percent to settle at $18,905 a ton at 5:51 p.m. on the London Metal Exchange. The metal is up 2.6 percent since Aug. 5, the biggest two-day gain since July 3.

“We like the nickel story again,” said Joseph Murphy, an analyst in London at Hermes Fund Managers Ltd., which oversees about $1.6 billion in commodities. “A lot of long positions have come out, but nothing’s fundamentally changed,” he said, referring to bets on higher prices.

Copper rose 0.4 percent to $6,999 a ton ($3.17 a pound) in London. Aluminum, lead and tin also advanced in London, while zinc fell.

On the Comex in New York, copper futures for delivery in September gained 0.3 percent to $3.176 a pound.