Nickel Sees Biggest Weekly Surge in Four Years on Inventory Fears

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Nickel Sees Biggest Weekly Surge in Four Years on Inventory Fears

Nickel prices advanced, registering the biggest weekly gain in four years on concerns that global inventories would come down after the world’s second-largest producer Vale SA closed a plant.

In 2014, the commodity has soared 43%, the highest gain among the main industrial metals traded in London.

Indonesia, which is the largest producer of the metal from mines, banned exports of raw ore, while a possibility of more economic measures on Russia has triggered concerns that supplies will be negatively affected, according to Bloomberg.

A Vale’s plant in New Caledonia, a South Pacific island country, halted operations this week after spill of an acidic solution.

TD Securities anticipates that global stockpiles will drop to a negative by next year.

“The market is in a frame of mind where bullish news is taken as extremely bullish. If that spill of acid had happened six months or nine months ago, it would have had no positive price impact at all,” said metal strategist Stephen Briggs of BNP Paribas SA in London.

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The per-metric ton price of three-month delivery nickel was at $19, 905 as of 5:50 pm after adding 2.6%. The metal saw its largest rise since February 2010, with the price soaring 9%.

Stats from TD Securities show that 2014 will see supply surpass demand by 70,000 tons, before the market witnesses a shortfall of 104,000 tons in 2015.

The biggest producer of the refined metal, OAO GMK Norilsk Nickel, is based in Russia, a nation that’s facing additional US and European sanctions after annexing Crimea from Ukraine and for its alleged role in fueling tensions in the region.

As Wall Street Journal reports, Indonesia accounts for 28% of global nickel output and surprised traders when it reaffirmed its position on the export ban. Exporters had expected the government would bulge, since reduced shipments were hurting the local economy.

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To contact the reporter of this story; Jonathan Millet at john@forexminute.com