Supply Shortfalls Send Nickel Higher – by Laura Clarke (Wall Street Journal – August 7, 2014)

Market is Still Reacting to the Ban on Ore Exports Imposed by Indonesia

Nickel prices leapt higher Thursday, as traders fretted about supply shortfalls, while other metals traded on the London Metal Exchange were steady.

The nickel market is still reacting to the ban on nickel ore exports imposed by top producer Indonesia earlier this year. That changed the landscape of the global nickel market, constricting supply to the biggest consumers in countries such as China, and sending prices soaring.

Still, some analysts say there may be some signs of some easing in Indonesia, which could dent nickel prices.

“We are not as enthralled by nickel, as there seems to be some ‘looser talk’ coming out of Indonesia with respect to the export bans, along with rising LME stockpiles,” said INTL FCStone analyst Edward Meir, in a monthly metals report.

At 0926 GMT, LME three-month nickel traded 1.7% higher on the day at $19,050 per metric ton. The metal was changing hands at highs not seen since July 28. Copper rose 0.3% to $6,988.75 per ton, while aluminum fell 0.5% to $2,013.75 per metric ton, and three-month zinc slide 1.6% to $2,320 per ton.

Elsewhere, three-month lead fell 0.8% to $2,225.75 per metric ton, while tin climbed 0.45 to $22,380 per ton.

“The markets are broadly balanced, the risk we think lies to the downside as after a pickup in investor interest in recent weeks or months there is a risk of stale long liquidation should prices start to lose momentum,” said FastMarkets head of research Will Adams. “In addition, we still see a risk of a broader based bout of risk reduction flowing through the markets triggered by a correction in equities.”

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