LME nickel more than doubles, tops $100,000/T on Russia supply risks
Synopsis
Russia supplies the world with about 10% of its nickel needs, mainly for use in stainless steel and electric vehicle batteries.
By , Reuters
Last Updated:
London nickel prices more than doubled on Tuesday to cross the $100,000-a-tonne level for the first time ever, as tension in eastern Europe showed no signs of cooling and growing sanctions against Russia fuelled fears of a disruption in supply.
Russia supplies the world with about 10% of its nickel needs, mainly for use in stainless steel and electric vehicle batteries.
"As sanctions against the Russians got rolled out last week with unprecedented speed, investors found themselves stripping away all Russian output from their supply and demand projections and marking up prices accordingly," ED&F Man Capital Markets analyst Edward Meir said in a note.
Western nations put sanctions on Moscow to isolate it from global commerce and are now considering a ban on Russian oil imports, news of which drove crude prices to a 14-year high on Monday.
Logistics disruptions have also roiled commodity markets.
Inventories of nickel in LME-registered warehouses stand at 76,830 tonnes, their lowest since 2019.
"I think the market will cool off... There's a lot of supply increase coming in 2022," said Steven Brown, an independent consultant based in Australia.
That would include a lot of new nickel matte production from Indonesia to drive prices lower near the end of 2022, he added.
Prices of other industrial metals also jumped, with benchmark zinc and tin rising to record highs of $4,896 a tonne and $50,510 a tonne, respectively.
FUNDAMENTALS
LME copper rose 3.6% to $10,648 a tonne, aluminium jumped 3.1% to $3,847, lead gained 6.4% to $2,605, zinc surged 11.3% to $4,551 and tin was 7.7% higher at $50,310.
ShFE copper edged 0.3% higher to 74,590 yuan a tonne, aluminium dropped 2.6% to 23,210 yuan, zinc gained 7% to 28,440 yuan, lead rose 1.6% to 15,935 yuan and tin climbed 12% to 391,400 yuan. Nickel hit a limit up of 15%, having touched a record high of 228,810 yuan a tonne in early trade.
China's Wuxi Stainless Steel Exchange Center has halted trading for nickel products from March 8 pending further notice, and raised trading limits for both stainless steel products and nickel since settlement on March 7.
The LME is imposing a backwardation limit and delivery deferral mechanism for physically settled base metals contracts with immediate effect, it said on Monday, citing the Russia-Ukraine conflict and tightness in the market.
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Three-month nickel on the London Metal Exchange soared 66.5% to $80,025 a tonne by 0635 GMT. Earlier in the session, the prices shot up nearly 111%, to a record $101,365.Russia supplies the world with about 10% of its nickel needs, mainly for use in stainless steel and electric vehicle batteries.
"As sanctions against the Russians got rolled out last week with unprecedented speed, investors found themselves stripping away all Russian output from their supply and demand projections and marking up prices accordingly," ED&F Man Capital Markets analyst Edward Meir said in a note.
Western nations put sanctions on Moscow to isolate it from global commerce and are now considering a ban on Russian oil imports, news of which drove crude prices to a 14-year high on Monday.
Logistics disruptions have also roiled commodity markets.
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Inventories of nickel in LME-registered warehouses stand at 76,830 tonnes, their lowest since 2019.
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"I think the market will cool off... There's a lot of supply increase coming in 2022," said Steven Brown, an independent consultant based in Australia.
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That would include a lot of new nickel matte production from Indonesia to drive prices lower near the end of 2022, he added.
Prices of other industrial metals also jumped, with benchmark zinc and tin rising to record highs of $4,896 a tonne and $50,510 a tonne, respectively.
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FUNDAMENTALS
LME copper rose 3.6% to $10,648 a tonne, aluminium jumped 3.1% to $3,847, lead gained 6.4% to $2,605, zinc surged 11.3% to $4,551 and tin was 7.7% higher at $50,310.
ShFE copper edged 0.3% higher to 74,590 yuan a tonne, aluminium dropped 2.6% to 23,210 yuan, zinc gained 7% to 28,440 yuan, lead rose 1.6% to 15,935 yuan and tin climbed 12% to 391,400 yuan. Nickel hit a limit up of 15%, having touched a record high of 228,810 yuan a tonne in early trade.
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China's Wuxi Stainless Steel Exchange Center has halted trading for nickel products from March 8 pending further notice, and raised trading limits for both stainless steel products and nickel since settlement on March 7.
The LME is imposing a backwardation limit and delivery deferral mechanism for physically settled base metals contracts with immediate effect, it said on Monday, citing the Russia-Ukraine conflict and tightness in the market.
