LONDON (Reuters) – Nickel is the weakest performer in the London Metal Exchange (LME) base metals pack so far this year. It’s a dramatic change of fortune after last year’s bull rally.
At a current $13,135 per tonne London nickel is down by almost 8% since the start of January and back to where it was last July, when Indonesia announced it was bringing forward a ban on the export of nickel ore from 2022 to this year.
The ban “remains a structurally bullish event”, according to analysts at Citi, given the flow of Indonesian ore to China accounts for around 12% of global mined nickel production. (“Nickel: it gets worse before it gets better, but still a medium-to-long term buy,” Feb. 5, 2020)
However, as the title of the bank’s research note suggests, nickel bulls are now on the back foot as the coronavirus spreads its chilling effect on Chinese manufacturing demand.
The virus represents another unknown in an already complex set of calculations as to whether Indonesia’s ore ban will translate into a shortage of metal.