Nickel prices surged to a seven-month high on Friday amid speculation of China’s plans to purchase the metal for state stockpiles and concerns over tightening supplies from Indonesia, the world’s top nickel exporter. The London Metal Exchange reported a 3.7% increase in three-month nickel, reaching $19,250 per metric ton, with a peak of $19,440 – the highest since September.
Rumors indicated that China’s National Food and Strategic Reserves Administration is looking to acquire nickel pig iron (NPI), a key component in stainless steel production. While one source suggested a purchase of 200,000 tons, others claimed the figure was closer to 20,000 tons of NPI containing approximately 10% nickel on average. Indonesia, a major supplier of nickel to China, is facing delays in mining quota approvals, leading to a tight supply situation in the market.
Furthermore, ongoing sanctions related to Russia have exacerbated supply concerns. Following decisions from Washington and London to ban the acceptance of newly-made Russian nickel, aluminum, and copper, the nickel market is bracing for potential disruptions in the supply chain. This news comes as nickel prices are on track for an 8% weekly increase, marking the largest gain in ten months.
The combination of Chinese demand, Indonesian supply constraints, and geopolitical factors surrounding Russian sanctions have created a perfect storm for the nickel market. Investors and industry experts are closely monitoring these developments as they could have far-reaching implications for the global nickel industry.
