London nickel surged to a near five-year peak on Friday while Shanghai nickel hit an all-time high, as a waste spill at a nickel plant in Papua New Guinea sparked supply shortage fears.
Shanghai’s most-traded nickel contract jumped as much as 3.3% to a record 130,890 yuan ($18,453.93) a tonne before closing up 3.2%. London nickel rose as much as 1.7% to $16,730 a tonne, its highest since December 2014.
A nickel plant of Metallurgical Corp of China’s Ramu Nickel Cobalt project in Papua New Guinea is facing compensation claims and possibly closure after it spilled waste into a local bay, a country official said.
“The market is now assuming that this supply may also be taken offline and this triggered further waves of buying and option covering,” said Malcolm Freeman of Kingdom Futures in a note.
FUNDAMENTALS
* NICKEL SPREAD: The premium for cash nickel over the three-month contract on the London Metal Exchange (LME) MNI0-3 has spiked to a 10-year high of $99 a tonne, signalling tight nearby supply. One party holds 50%-80% of available LME inventories. <0#LME-WHL> “(Nickel is) tight all the way out to June 2020 now,” said a metal trader.
* NICKEL STOCKS: Nickel inventories in LME-approved warehouses MNISTX-TOTAL have edged up in August, but are still hovering around a six-year low, while ShFE nickel stocks last week rose to their highest since June 2018. SNI-TOTAL-W
* NICKEL/TIN: ShFE nickel on Friday surpassed tin prices for the first time since both contracts were launched in 2015, after LME nickel prices topped tin on Tuesday.
* CHINA: Factory activity in China is expected to have contracted for a fourth straight month in August, a Reuters poll showed, as the United States ratcheted up trade pressure and domestic demand remained sluggish.
* TRADE TALKS: Beijing said Chinese and U.S. trade negotiating teams are maintaining effective communication while both countries gave signs that they will resume trade talks in September.
* JIANGXI: China’s Jiangxi Copper Co produced 749,300 tonnes of refined copper cathode in January-June, up 3.5% from a year earlier, and 102,000 tonnes of copper concentrate during the period, up 0.2% year-on-year.
* PRICES: LME copper eased 0.5%, aluminium edged down 0.3%, lead dipped 0.8%, while Shanghai copper rose 0.2%, lead fell 0.3% and tin declined 0.1%.
* ZINC: Zinc prices on both the LME and ShFE were on track for a fifth straight monthly decline, as the U.S.-China prolonged trade war weighed on demand outlook. LME zinc fell 0.9% while ShFE zinc declined 0.2%.
