Nickel hit the highest in nearly eight months on Friday on worries about possible mine closures in the Philippines while other metals got support from a weaker dollar and hopes for more stimulus in China. Speculators piled in as aluminium touched the strongest in nearly two months while zinc extended gains, touching another one-year peak, traders said.
Three month nickel on the London Metal Exchange soared 5.6 percent to close at $9,970 a tonne, the strongest since early November 2015 and the biggest one-day gain since mid-February. "People are getting excited about the Philippines," said analyst David Wilson at Citi in London.
The new mining minister, a committed environmentalist, announced plans on Friday to review all mines operating in the country, the biggest supplier of nickel ore to China. LME aluminium ended 0.9 percent higher at $1,664.50, the strongest since May 3. Aluminium has been bolstered as industrial firms in China increasingly buy it in liquid form, creating a shortage of ingots, the form of the metal which drives prices.
The shortage was highlighted on Friday when weekly data showed inventories on the Shanghai Futures Exchange (ShFE) slid 11.5 percent to 163,664 tonnes. That means that ShFE inventories have tumbled by more than half from 341,615 tonnes in mid-March. "The ingot market is tightening up and you're seeing some pretty hefty draws from Shanghai inventories. The market is priced on ingot not liquid metal," Wilson said. Zinc ended 2.4 percent stronger at $2,155, a fresh 1-year peak, rising for a fourth straight session as funds continue to pile into the market.
Expectations of potential shortages have fuelled buying in zinc but an inventory overhang means the metal is readily available for consumers. Total world stocks of zinc at the end of April stood at about 1.5 million tonnes, according to the International Lead and Zinc Study Group. Analysts estimate demand for global zinc this year to be around 14 million tonnes. Copper underperformed, adding 1.4 percent to finish at 4,911 a tonne, after data showed ShFE inventories rose for the first time in nearly two months. Lead closed up 3.6 percent to $1,850.50 a tonne, the highest in over three months, while tin finished 2.5 percent firmer at $17,470.
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