Nickel and copper rose on Monday, boosted by expectations of healthy demand from the electric vehicle sector, a pollution crackdown in China and signs of solid global economic growth. Participants at the LME Week industry gathering in London last week were bullish about the sector's prospects, especially because of anticipated growth in demand for electric vehicles, which depend heavily on nickel and copper.
"Markets like a good story whether it's electric vehicles, China's 'One Belt, One Road' (economic initiative) or even India (growth) but we're going to struggle to make new ground from here," Societe Generale analyst Robin Bhar said. "A stronger dollar may provide headwind through to the end of the year, but we should stay well-supported at these levels."
London Metal Exchange nickel ended up 1.5 percent at $12,920 a tonne, having gained nearly 10 percent last week to hit a high above $13,000, its loftiest level since June 2015. Goldman Sachs upgraded its nickel forecasts, pushing its three-month nickel view to $12,500 a tonne from $9,000, but said prices were more likely to find nearby support from China's pollution crackdown given electric vehicle demand is a story for 2020 onwards.
"We expect nickel prices to remain high over the next couple of months on a supportive macroeconomic backdrop and market tightening driven by Chinese nickel pig iron (NPI) cuts," it said in a report. NPI is a low-grade composite of nickel. Chinese iron ore futures climbed more than 6 percent, tracking firmer steel prices after China's top steel province surpassed its capacity reduction targets as Beijing's pollution crackdown heats up.
Copper closed up 1.1 percent at $6,970, paring losses from the previous session. Copper prices have climbed 7 percent this quarter and are eyeing a sixth straight quarter of growth. The dollar was little changed, lessening some headwinds for metals after surging on bets that the Federal Reserve will raise interest rates again next month and tighten further into 2018 as US economic growth remains firm.
Copper production in Democratic Republic of Congo, Africa's top producer of the metal, was up 9.3 percent this year through September over the same period last year at 831,000 tonnes. Aluminium ended down 0.6 percent at $2,171 a tonne, zinc closed up 0.4 percent at $3,232, lead closed up 1.9 percent at $2,510 having earlier hit a near two-week high, while tin ended down 0.5 percent at $19,450.