LONDON (Reuters) – Whatever happened to that old market adage of buying the rumor and selling the fact? Nickel investors bought heavily into rumors that the Indonesian government was thinking about bringing forward a ban on nickel ore exports.
Now the ban has been confirmed for the start of next year rather than the original 2022 deadline, they have bought some more. London Metal Exchange (LME) three-month nickel hit a five-year high of $18,850 per tonne on Monday with the Shanghai Futures Exchange scaling life-of-contract highs amid surging open interest.
Goldman Sachs added fuel to the bull fires with a forecast that the nickel price could spike to $20,000 over three months. An Indonesian export ban could impact up to 10% of global supply, according to the bank.
That analysis comes with multiple moving parts, not least Indonesia’s own recent history of policy U-turns on the question of its nickel exports. While some sort of supply disruption is guaranteed, there is a lot of speculative heat in the sizzling nickel market right now, meaning more price volatility is also guaranteed.
The nickel market has been here before. Indonesia banned all exports of nickel ore at the start of 2014 before allowing a partial resumption by operators who could prove they were working on building processing capacity.
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