Supply crunch holds nickel near 11-year highs

LONDON: Nickel prices rose on Wednesday and hovered around 11-year highs as a supply shortage forced traders to pay huge premiums to get their hands on metal.

Benchmark nickel on the London Metal Exchange (LME) was up 1% at $22,290 a tonne at 1158 GMT after reaching $22,935 on Jan 14.

Used in stainless steel and for batteries for electric vehicles, nickel is up around 7% this year after rising 25% in 2021 and 18% in 2020.

With exchange stockpiles falling, the tom/next and cash-to-three-month spreads surged to their highest in more than 10 years on Tuesday, prompting the LME to say it was monitoring the market. Premiums eased on Wednesday.

"We're bullish for nickel," said Sucden analyst Geordie Wilkes. "We could see some softness in the near term but that's nothing to worry about when you look at the fundamentals."

Nickel leaps to highest since 2011 as stockpiles dwindle

Inventories: Stocks in LME-registered warehouses have fallen to 94,830 tonnes from more than 260,000 tonnes in April. Inventories in Shanghai Futures Exchange warehouses, at 4,711 tonnes, are near record lows.

China: The central bank of China, the biggest metals consumer, will roll out more policy measures to stabilise the economy, vice governor Liu Guoqiang said.

Aluminium: LME aluminium was up 0.3% at $3,034 a tonne after reaching $3,049, the highest since Oct 21. Prices are up 8% percent this year after rising 42% in 2021.

Higher power prices have forced smelters to cut output, tightening the market.

"The past three months saw a ~800kt/y of European smelting capacity curtailed, with up to 1.2Mt/y of smelting capacity at risk over the next few months," said analysts at Citi.

"We are very bullish aluminium and copper over the medium term," they said.

Tin: LME tin was flat at $42,295 a tonne after touching an all-time high of $2,400. Prices are up 8.5% this year after rising 92% in 2021.

Indonesia, the second biggest producer, has yet to issue any permits to export tin in 2022 via ICDX, one of its commodity exchanges, an bourse official said.

Other Metals: LME copper was up 1.2% at $9,788.50 a tonne, zinc was 0.1% higher at $3,570.50 and lead rose 1.1% to $2,348.