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Nickel storms to 10-year peak on worries about supplies
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Published on January 12,2022 09:00 AM Metals
Nickel prices surged to their highest in a decade on Wednesday as investors bet automakers will have to scramble to secure supplies for their electric vehicle batteries as inventories dwindle.

LONDON, Jan 12 (Reuters) - Nickel prices surged to their highest in a decade on Wednesday as investors bet automakers will have to scramble to secure supplies for their electric vehicle batteries as inventories dwindle.

Nickel was the top performer among industrial metals, which also rallied as worries eased about economic growth in top metals consumer China.

Three-month nickel on the London Metal Exchange jumped as much as 4.4% to $22,745 a tonne, the highest since August 2011. It pared gains to $21,970 in official open outcry trading, up 0.8%.

"The battery king nickel has been the initial driver, breaking above that $21,000 level, gapping higher, and now the rally is filtering through to copper and the others," said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.

Nickel's sharp gains were fuelled by speculators buying back bearish positions, broker Marex said in a note.

"The focus in China is moving away from worries about the property sector slowdown to increased signs that they are going to provide stimulus and support to the economy, some of which will benefit industrial metals," Hansen added.

In China, nickel prices leapt to a record high, with the February contract on the Shanghai Futures Exchange ending daytime trading 3.8% higher at 162,340 yuan ($25,510) a tonne.

A Singapore-based trader said that inventories were running low partly due to restocking by Chinese stainless steel mills.

* Nickel stocks in LME warehouses have halved over the past five months to 99,462 tonnes, their lowest levels since December 2019, while refined nickel inventories in ShFE warehouses held close to a record low of 4,455 tonnes hit in August 2021.

* LME cash nickel was at a premium of $192 a tonne over the three-month contract , its highest since October 2019, indicating tight nearby supplies.

* Analysts at Goldman Sachs forecast the nickel market to be in a 30,000 tonne deficit in 2022, up from their August forecast of a 13,000 tonne deficit.

* LME copper gained 2.2% in official activity to $9,930 a tonne after touching the highest level since Oct. 21, aluminium rose 1.4% to $3,012, lead climbed 1.1% to $2,326 and zinc added 0.3% to $3,566.

Tin touched a record high of $41,490 a tonne and was last up 2.3% at $41,370.

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