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METALS-Nickel hits near one-year high fuelled by Philippine mine closure

(Updates prices, adds details)

Oct 28 (Reuters) - Nickel prices jumped to their highest level in nearly one year on Wednesday on supply worries after the top nickel ore producer in the Philippines suspended operations at a mine following a coronavirus outbreak.

The Philippines is the top supplier of nickel ore to China, the world’s biggest user of the metal.

The most-traded December nickel contract on the Shanghai Futures Exchange (ShFE) jumped as much as 5.7% to 125,670 yuan ($18,748.60) a tonne, its highest since Nov. 11.

Three-month nickel on the London Metal Exchange advanced as much as 2.5% to $16,310 a tonne, a level unseen since Nov. 7.

Nickel Asia Corp said it suspended operations at its Hinatuan mine, one of its four in the Philippines, until Nov. 10, after 19 employees tested positive for the virus. The mine contributed 11% of the firm’s ore sales volume last year.

“This will cause nickel price to shoot up a lot,” said a Singapore-based nickel trader. “Pandemic situations pose a big threat to the supply chain. It can explode very fast.”

Nickel ore supplies have been tight in China since top producer Indonesia banned exports from January.

FUNDAMENTALS

* LME copper gained 0.2% at $6,809.50 a tonne at 0701 GMT and zinc advanced 1.5% to $2,582 a tonne. In Shanghai, copper rose 0.6% to 51,840 yuan a tonne and zinc advanced 1.8% to 20,090 yuan a tonne.

* Nickel’s spectacular rally over the last month, fuelled by ore shortages and robust demand from China’s stainless steel mills, still has momentum, but prices will retreat as supplies rise and demand dwindles.

* Yangshan copper premium SMM-CUYP-CN fell to its lowest since May 2019 at $49 a tonne, indicating weak demand for imports into China, the world's biggest consumer of the metal.

* For the top stories in metals and other news, click or ($1 = 6.7029 yuan) (Reporting by Mai Nguyen; editing by Uttaresh.V, Sherry Jacob-Phillips and Amy Caren Daniel)

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