Nickel Gains Most in Week on Signs Producers Are Cutting Output

Nickel climbed, leading increases in industrial metals, amid signs the slump in prices is forcing some producers to curtail production.

Global nickel output is likely to fall as some producers hit a “pain threshold” on lower prices, Dan Lougher, chief executive officer of Western Areas Ltd., said in an interview on Tuesday. Standard Chartered Plc estimates as much as 65 percent of nickel production is unprofitable at current prices. Metals also rallied as China planned a bond program for construction stimulus, which may improve prospects for raw-material demand.

“I still expect a lift in nickel prices from this level going forward,” Casper Burgering, an analyst at ABN Amro Bank NV in Amsterdam, said by phone. “The second half should be better.”


Nickel for delivery in three months advanced 1.3 percent to $10,885 a metric ton by 12:31 p.m. on the London Metal Exchange after rising as much as 1.9 percent, the most since July 28. It’s down 28 percent in 2015 and is this year’s worst performer among the main industrial metals on the LME.

Copper rose for the first day in four after sliding to a six-year low on Monday. The metal is close to a bear market after falling 19 percent from a peak on May 5. Zinc climbed as much as 1.6 percent after orders to remove the metal from warehouses tracked by the LME surged 54 percent.
Bond Stimulus

China is planning at least 1 trillion yuan ($161 billion) in bonds, and potentially a multiple of that, to fund construction projects to address the struggling economy, according to people familiar with the matter. The bond program is taking shape amid fresh signs that growth is running at less than an official target of about 7 percent for this year.

“Prices have lifted for all base metals this morning quite steeply,” Burgering said. “It could be that the market is hoping for some economic stimulus.”

Metals have declined to the lowest since 2009 amid the commodity rout. Oil is in a bear market, while platinum sank 1.7 percent on Tuesday to a six-year low and palladium dropped to an October 2012 low. On the LME, tin and lead increased Tuesday, while aluminum was little changed.

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Chinese Nickel Imports Jump to 6-Year High as Shortage Looms

Chinese Nickel Imports Jump to 6-Year High as Shortage Looms

China imported the most refined nickel in six years in a further sign that the world’s biggest consumer is drawing on global supply. Futures rose 2.4 percent in London.

Inbound shipments of the metal used to produce stainless steel surged 67 percent to 38,545 tons in June from the previous month, the highest since July 2009, and were more than three times the level a year earlier, Chinese customs data show.

Goldman Sachs Group Inc. and Citigroup Inc. are bullish on prices amid prospects for rising Chinese demand. Macquarie Group Ltd. sees a global shortage which may cut inventories further from a record. Stockpiles in London Metal Exchange sheds have already fallen to the lowest in almost two months. Some imports may have been for delivery against the first nickel contract to expire on the Shanghai bourse, said Celia Wang from Tianjin Zhongwei Group’s investment department.


“Huge imports arrived in China from LME warehouses as traders seek profits by delivering against the first settlement of a Shanghai nickel futures contract,” said Wang, the general manager. “Refined nickel imports are expected to remain at a high level into July.”

The Shanghai Futures Exchange started nickel trading in March and the July contract was the first expiry. The bourse is accepting metal from Moscow-based OAO GMK Norilsk Nickel, the top supplier, for settlement to ease concern about shortages.
Goldman, Citigroup

Prices climbed 2.4 percent to $11,980 a ton in London on Tuesday, the highest level since July 6, before trading at $11,875. Goldman expects rates to increase to $14,000 as the market heads toward a deficit next year, analysts including Yubin Fu wrote in a report dated July 6. Citigroup predicts a 2015 average price of $13,960 and maintains a bullish outlook.

Imports of ferronickel rose more than threefold on year to 62,511 tons, another sign China is seeking foreign supply.

An Indonesian ban on exports of nickel ore at the start of 2014 spurred China to stockpile the material and boost supplies from the Philippines, the only other major source. Inventories of nickel ore in China are now at their lowest since September 2011, according to data from Beijing Custeel E-Commerce Co.

China imported more than 100,000 tons of refined nickel in the first half for the first time since 2009 when buyers took advantage of a slump in demand after the financial crisis.

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