Shanghai nickel hits 3-month high amid supply fears

Feb 23, 202404:13 UTC

Shanghai nickel extended gains to a three-month peak on Friday, supported by concerns over Indonesian ore supply and a potential U.S. sanction on Russian metal.

The most-traded March nickel contract on the Shanghai Futures Exchange (SHFE) NICKEL1! closed day-time trade 4.4% higher at 135,620 yuan ($18,841.61), its highest since Nov. 20.

The contract has gained 6.9% this week, the biggest weekly rise since June.

Meanwhile, three-month nickel on the London Metal Exchange (LME) HG1! advanced 0.5% to $17,475 a tone, a three-month high as of 0756 GMT.

Reemerging speculation over the slow process of Indonesia's mining quota approval sparked fears of ore supply tightness, analysts at CITIC Futures said in a note.

Indonesia, the world's top nickel producer, is currently reviewing miners' application to issue the mining quota approval for the next three years.

Other minerals are also facing the same issue, with the country's refined tin exports falling 99% in January to 400 kg due to the delay.

U.S. President Joe Biden said Washington plans to announce a major sanctions package against Moscow on Friday, triggering speculation over expansion of sanctions on Russian metals.

The dollar index was little changed after sliding in previous sessions as investors awaited new data for clues on when the Federal Reserve is likely to begin cutting interest rates.

Elsewhere, LME aluminium ALI1! climbed 0.5% to $2,208 per ton, copper (CMUC3) dipped 0.1% at $8,580, zinc ZNC1! rose 0.6% to $2,401.50, lead LEAD1! nudged 0.1% higher at $2,089.50, and tin FTIN1! rose 1.1% to $26,450.

Deliverable copper stocks on SHFE jumped 109.6% to 181,323 tons on Friday, from the last release before the Lunar New Year holiday.

SHFE aluminium ALI1! added 0.2% to 18,850 yuan a ton, copper HG1! was up 0.2% at 69,270 yuan, zinc ZNC1! gained 0.1% to 20,405 yuan, while lead LEAD1! moved 0.1% lower to 15,865 yuan, and tin FTIN1! slid 0.3% to 216,640 yuan.

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($1 = 7.1979 Chinese yuan renminbi)