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LME Nickel Soars A Record 30% On Russia Supply Concerns

London nickel prices soared as much as 30.7% on Monday, the biggest daily percentage gain on record, as supply fears gripped markets amid an escalating Russia-Ukraine conflict


Tsingshan
Tsingshan has to either pay off the outstanding short positions, which could be as high as $8 billion, or prove it has sufficient deliverable nickel to repay in kind. Photo: AFP.

 

London nickel prices soared as much as 30.7% on Monday, the biggest daily percentage gain on record, as supply disruption fears gripped markets amid an escalating Russia-Ukraine conflict and mounting sanctions against Moscow.

Russia accounts for around 7% of global production of nickel, which is used to make stainless steel and batteries for electric vehicles.

Three-month nickel on the London Metal Exchange was up 25.9% at $36,410 a tonne by 0830 GMT. Earlier in the session, it hit its highest since June 2007 at $37,800.

The most-traded April nickel contract on the Shanghai Futures Exchange ended daytime trading up 12% at a record high of 210,950 yuan ($33,406.18) a tonne.

Global inventories of nickel were already low, adding to price spikes which have seen prices of LME nickel rally 76% since the start of this year.

“Nickel was already in tight supply, and if a large supplier is being taken out from the market, it will have a cascading impact in the near- to medium-term,” Kunal Sawhney, chief executive officer at research firm Kalkine, said.

“The surge in prices is going to add further pressure on spot supply.”

Premiums for cash nickel over a three-month contract have risen to $690 a tonne, the highest since 2007, indicating tight nearby supplies.

Russia’s invasion of Ukraine has triggered sweeping Western-led sanctions aimed at crippling the Russian economy.

“With heightened uncertainty, potential for higher interest rates and lower consumer spending in a high-cost energy environment, demand for metals may come under pressure,” analysts at RBC said in a note.

Russia produces about 6% of the world’s aluminium and accounts for about 3.5% of copper supplies.

Benchmark aluminium CMAL3 on the LME rose to a record $4,073.50 a tonne and was last up 4.7% at $4,028.

 

FUNDAMENTALS

  • LME copper rose 1.1% to $10,794.5 a tonne, lead was up 1.8% at $2,501.5, zinc gained 3.7% to $4,200.5 and tin climbed 2.3% to $48,650.
  • ShFE (Shanghai) copper gained 3.1% to 74,980 yuan a tonne, aluminium was 1.6% higher at 24,020 yuan, zinc climbed 2.7% to 26,560 yuan, lead rose 2% to 15,770 yuan and tin jumped 4.8% to 358,500 yuan.
  • Oil prices soared and shares sank in frantic trading on Monday as the risk of a US and European ban on Russian oil and delays in Iranian talks triggered what was shaping up as a major stagflationary shock for world markets.
  • China’s unwrought copper imports unexpectedly rose 9.6% year-on-year during the first two months of 2022, customs data showed on Monday, as a delay in logistics pushed up imports.

 

• Reuters with additional editing by Jim Pollard

 

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Jim Pollard

Jim Pollard is an Australian journalist based in Thailand since 1999. He worked for News Ltd papers in Sydney, Perth, London and Melbourne before travelling through SE Asia in the late 90s. He was a senior editor at The Nation for 17+ years and has a family in Bangkok.

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