August 8, 2019 / 9:47 AM / 9 days ago

UPDATE 1-Nickel sizzle: Hot money piles into metal on Indonesia ore ban talk

* LME nickel jumps as much as 12.7%

* ShFE nickel hits record high

* Ore ruling change “uncertain” - senior official (Adds quotes, details)

By Mai Nguyen and Bernadette Christina

SINGAPORE/JAKARTA, Aug 8 (Reuters) - Nickel prices surged on Thursday on concerns that major supplier Indonesia could bring forward a ban on ore exports despite a senior official claiming any such ruling remains “uncertain.”

Benchmark three-month nickel on the London Metal Exchange (LME) surged as much as 12.7% to $16,690 a tonne, its highest since April 2018. That is the biggest intraday percentage gain for the nickel forward since Jan. 2, 2009.

LME nickel eased to $15,545 a tonne at 0940 GMT, up 5%.

The most active nickel contract on the Shanghai Futures Exchange (ShFE) rose to a record 124,890 yuan ($17,730.49) a tonne.

“This is a very sexy price. For miners, higher price always makes us happy,” said a trader with a nickel mine.

Indonesia, a major supplier of nickel ore used mainly in the stainless steel industry, relaxed a ban on ore exports in 2017, but said at the time the moratorium would last only five years and that exports would be restricted again in 2022.

“I can only talk about the existing (rules). I don’t want to talk about something that is uncertain,” Bambang Gatot Ariyono, director general of mineral and coal at Indonesia’s mining ministry, told Reuters on Thursday when asked if the government is planning to move forward the ban.

Earlier this week, Ariyono said he did not want to speculate on whether the government might bring forward the ban.

Market participants, however, still expected the restriction to come before 2022.

“People believe the ban is coming,” said an executive at a major nickel producer in Indonesia.

LME nickel prices have surged about 50% so far this year, also supported by hopes that electric vehicle (EV) makers will need more nickel for their batteries.

Consecutive years of supply deficit have also underpinned prices.

Underscoring fears that Indonesia may enforce export restrictions is Indonesian President Joko Widodo’s recent move to establish Indonesia as a major EV hub, which has raised speculation he may want to ensure adequate raw material supplies for the industry.

Still, the rally caught many by surprise, as the overall tone of the raw materials markets for EV makers has been subdued of late after China cut subsidies for its own EV makers. The outlook for steel has also softened lately, amid a cooling in China’s property sector and a struggling manufacturing arena.

“People are very confused! They have no idea what happened...(This is) certainly not driven from fundamental,” said a nickel analyst.

Thursday’s trading volume for the most active Shanghai nickel contract was just shy of 2 million lots, more than double the 30-day average of 928,659, ShFE data showed.

“People sell LME and buy ShFE yesterday, but LME jumped up sharply and they are losing money from yesterday’s deals, so today they have to buy LME and sell ShFE to close all contracts,” said another nickel analyst.

As Widodo is not expected to finalise his new cabinet until his second inauguration in October, no ore ban is expected immediately. But miners and traders speculate it will be under discussion as the government’s new agenda is established.

“Nickel has performed remarkably well, and is now at a crossroads, with the outlook dependent on unpredictable Indonesian policy,” said Citigroup analysts in a report on Wednesday.

Citi forecasts nickel could fall by about $2,000 a tonne, or about 13%, if the export ban is not announced in the next one or two months but could rise by that amount if the ban is announced. ($1 = 7.0452 Chinese yuan renminbi)

Reporting by Mai Nguyen in SINGAPORE, Melanie Burton in MELBOURNE and Bernadette Christina in JAKARTA; Additional reporting by Fransiska Nangoy in JAKARTA and Tom Daly in BEIJING; editing by Christian Schmollinger

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below