Nickel Climbs as Stainless Steel Producers Prepare for Indonesia Ban

Nickel prices climbed last week as stainless steel producers bought supplies ahead of a Chinese holiday and an Indonesian nickel ore export ban that could create shortages.

Top supplier Indonesia’s plan to ban exports of nickel ore has been brought forward by two years to Jan. 1, 2020, and the Philippines, the world’s second-biggest ore producer, could suspend five mining companies at the end of this year.

“There have been some anecdotes of stainless mills restocking nickel and that has been positive,” said analyst Nicholas Snowdon at Deutsche Bank in London.

Nickel is mostly used as an alloy in the production of stainless steel. It is also the most important metal mined in Sudbury.

“Across most sectors, in the week before the Golden Week holiday, you’ll invariably see a bit of raw material restocking, so we have elements of that in nickel alongside the broader potential restocking as we head into the (Indonesia) ban application.”

China celebrates its National Day Golden Week holiday in early October.

Benchmark nickel on the London Metal Exchange gained 2.6 per cent to $17,725 a tonne (or just over $US 8 a pound) in official open-outcry trading, on track for its biggest one-day gain in three weeks.

  • CHINA RATE CUT: Base metals also gained support from China cutting its one-year benchmark lending rate for the second month in a row on Friday.
  • NICKEL INVENTORIES: Nickel stocks in warehouses monitored by the Shanghai Futures Exchange slid 13.6 per cent, weekly data showed on Friday.
  • NICKEL SPREAD: The premium of LME cash nickel over the three-month contract climbed to $150 a tonne, near the recent decade high of $163, indicating near-term tightness.
  • MARKET DEFICIT: The global nickel market deficit widened to 6,700 tonnes in July from a revised 2,700 tonnes in the previous month, the International Nickel Study Group (INSG) said on Thursday.
  • ALUMINIUM OUTPUT: LME aluminum, untraded in official rings, was bid down 0.6 per cent at $1,790 a tonne after data showed that global primary aluminum output rose to 5.407 million tonnes in August from a revised 5.404 million tonnes in July.
  • COPPER DEMAND: Fitch Solutions cut its average price forecast for copper to $5,900 a tonne this year and $5,700 in 2020, from previous views of $6,300 a tonne and $6,600 a tonne respectively.

“A drop in Chinese demand has loosened the global (copper) market, while sentiment continues to worsen,” Fitch said in a note.

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