Nickel jumps six percent

London nickel futures surged 6 percent on Thursday after a plant in Australia said it would shut for repairs, but lead fell over 4 percent and copper around 1 percent on rising inventories, analysts said. London Metal Exchange nickel hit $24,600 a tonne, its highest level since May 22 before closing at $23,950/23,800, up from $23,200 on Wednesday.
"The market is going to be in deficit this year rather than a surplus," said analyst Daniel Smith at Standard Chartered. "Prices are going to head towards $26,000 a tonne."
Copper closed $85 lower at $7,835 with sentiment dampened by persistent worries about falling demand from top consuming countries China and the United States, while lead fell to $1,820, its lowest since last March, before closing at $1,830.
Stocks of lead in LME warehouses are up 58 percent since the start of the year, while copper stocks at around 121,000 tonnes are about 10 percent higher then the levels seen in early May. "Demand is still soft in China, imports of copper were down," Smith said, referring to Chinese data showing lower imports of copper in May. Nickel prices jumped after global miner BHP Billiton said it would close a 100,000 tonne-per-year nickel operation for four months for repairs.
BHP estimated the shutdown of the operations in Western Australia would reduce its nickel sales by 28,000 tonnes, cutting world nickel supplies by almost 2 percent. "It is literally wiping out most of the surplus for this year," analyst Max Layton at Macquarie Bank said. Nickel prices have seen a steep decline in 2008, down more than 10 percent from the start of year as stainless steel makers, which consume around two-thirds of the world's nickel, scaled back purchases in light of slowing demand for their products.
Aluminium eased $10 to close at $2,950 a tonne. Energy shortfalls continued to haunt the aluminium market after difficulties with supplies in various parts of the world.
Electricity-hungry aluminium smelters and nickel pig iron mills in Shandong province may consider reducing output after the provincial government raised power prices, analysts said. Zinc shed $50 to $1,870/1,871 and tin fell $425 to $21,075/21,100 per tonne.