Nickel jumps to 11-month peak on industrial and fund buying

LONDON: Nickel prices surged to their highest in 11 months on Tuesday, propelled by buying from speculators and industrial consumers worried about potential future shortages.

A key ingredient in batteries for electric vehicles (EVs), nickel could be subject to increasingly heavy demand with an expected shift from diesel and petrol cars in the coming years.

"We've been hearing about consistent strong Western consumer buying as the main driver of the price, probably related to EV nickel hedging requirements," said Nicholas Snowdon, metals analyst at Deutsche Bank in London.

Current estimates peg the future supply situation as less critical than forecasts from a year ago, but industrial buyers remain nervous about availability, Snowden said.

"The balance has softened from a sizeable deficit to close to balance," he said. "But it's not a sudden swing back to significant surplus and ample availability, so I think there's still a concern over making sure that you have enough raw materials."

As nickel prices ramped up, buying from speculators extended the rally, one broker said. "It's CTA (commodity trading advisers) momentum buying ... that is pushing things (nickel) higher."

CTA funds often base trading decisions on chart patterns and technical levels, including momentum.

Benchmark three-month nickel on the London Metal Exchange (LME) climbed as much as 2.7% to $14,025 a tonne, its highest since last August, and traded 2.3% higher at $13,980 in official open outcry activity.

Prices of nickel, mainly used in the stainless steel industry, have also been boosted by worries of restricted ore supplies from major producer Indonesia because of a planned 2022 export ban.

LME nickel has been the best-performing base metal this year with gains of 31% while most other base metals have fallen.

* RIO TINTO COPPER: Rio Tinto flagged a cost blowout of up to $1.9 billion and a delay of up to 30 months at its Oyu Tolgoi underground copper mine in Mongolia, the miner's key growth project.

LME copper was bid down 0.1% to $5,980 a tonne.

* ZINC/LEAD BALANCES: During the first five months of the year the global zinc deficit increased to 123,000 tonnes from 103,000 in the same period last year, data showed. The lead deficit, meanwhile, rose to 42,000 tonnes from 34,000 tonnes.

* CHINA OUTPUT: China's June refined copper output rose 11.8% year on year to 804,000 tonnes, its highest since December, while alumina output rose 5.4% to 6.41 million tonnes, its highest in more than two years.

* PRICES: LME three-month aluminium, untraded in official rings, was bid down 0.3% to $1,836 a tonne, zinc was bid 0.6% firmer at $2,459, lead was bid up 0.2% at $1,985 while tin gained 0.7% to trade at $18,030.