Shanghai nickel rises on low stockpiles, Nornickel accident

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SINGAPORE - Shanghai nickel prices rose on Wednesday, tracking gains overnight in London, buoyed by supply concerns amid falling inventories and following an accident at major nickel producer Nornickel's mine in Siberia.

The most-traded nickel contract on the Shanghai Futures Exchange (ShFE) rose as much as 4.8% to 132,210 yuan ($18,662.39) a tonne, after benchmark nickel on the London Metal Exchange (LME) climbed 2.5% in the prior session.

Nickel stocks in LME-approved warehouses fell to 87,132 tonnes, hovering around their lowest since November 2011, latest data showed, while ShFE nickel inventories have picked up recently .

Three people were killed on Tuesday in an accident at major producer Norilsk Nickel's Taimyr underground mine in Siberia, raising some supply concerns, but the fear quickly eased after the company said the mine was unaffected.

LME nickel fell 0.6% by 0408 GMT to $16,410 a tonne, after traders and analysts said prices might have been overpriced after hitting a five-year high in September due to an export ban of nickel ore from top producer Indonesia.

The benchmark contract had leaped 76% from the beginning of 2019 to a five-year high on September 2, but has since fallen some 13%. However, traders noted some strong buying orders when prices fall, preventing a sharp drop in LME nickel prices.

"The vested interest by the big players are too big. Seems like they still have plenty of firepower. I doubt there'll be many brave short sellers going against this kind of deep pockets," said a nickel trader.

FUNDAMENTALS

NICKEL SPREAD: The differences between LME cash and nickel three month contracts flipped to a discount this week, after holding in premium zone for more than two months, indicating supply tightness has eased.

NICKEL: Global demand for nickel is expected to increase to 2.52 million tonnes in 2020 versus 2.45 million tonnes in 2019, while global output of nickel is expected to increase to 2.48 million tonnes in 2020 versus 2.37 million tonnes in 2019, the International Nickel Study Group said.

COPPER: Miner Anglo American Plc forecast lower full-year copper production, as it grapples with a water shortage in Chile, while raising the annual iron-ore production outlook for its Minas-Rio mine in Brazil.

CODELCO: Workers at Chile's state-owned Codelco, the world's largest copper producer, will join a general strike planned for Wednesday amid protests that have shaken the country, the head of the union group told Reuters on Tuesday.

ALUMINIUM: Global miner Rio Tinto Ltd on Wednesday flagged a possible pullback or closure of New Zealand's Aluminium Smelter, citing weakness in the aluminium market and high energy costs.

PRICES: LME copper fell 0.4%, zinc declined 0.7%, lead dropped 1% while tin eased 0.3%. ShFE copper fell 0.3%, zinc declined 0.7%, lead lost 1.2% while tin rose 0.4%.

PRICES

Three month LME copper

Most active ShFE copper

Three month LME aluminium

Most active ShFE aluminium

Three month LME zinc

Most active ShFE zinc

Three month LME lead

Most active ShFE lead

Three month LME nickel

Most active ShFE nickel

Three month LME tin