Nickel rises amid Vale plant suspension

May 12, 2014 06:48 AM

Nickel rose for a fifth session in London to the highest price since 2012 on speculation the metal will be in shorter supply as activity remains suspended at Vale SA’s plant in New Caledonia.

Vale, the second-largest nickel producer, said May 10 it expected to restart operations “shortly.” The suspension added to concern production might fall short of demand after Indonesia, the biggest nickel-mining nation, barred exports of raw ores in January. The potential for more Western sanctions against Russia also aided prices, according to Fastmarkets.com.

“As for nickel, the story stays the same, with the recent show of extra strength fueled by the production disruption at Vale New Caledonia and concerns over sanctions,” William Adams, an analyst at Fastmarkets.com in London, said in a note today.

Nickel for delivery in three months added 4.4 percent to $20,778 a metric ton by 12:54 p.m. on the London Metal Exchange after touching $20,870, the highest since February 2012. Prices surged 49 percent this year and had the largest weekly increase since February 2010 last week.

Russia, under threat of sanctions after intervening in Ukraine, is home to OAO GMK Norilsk Nickel, the leading producer of refined metal. Two Ukrainian regions held referendums on autonomy yesterday as European leaders threatened more sanctions against Russia. Vale had to halt the plant in the South Pacific island archipelago after an acid-containing solution spilled.

Nickel’s 14-day relative strength index, indicating whether a commodity is overbought or oversold, was near 90 today. It has exceeded 70, a level suggesting an impending drop to some analysts who study technical charts, since April 9.

“The rally is strong, but overbought,” Adams said.

Copper climbed on speculation leading global consumer China will move to support markets. The government will relax foreign- investment limits in listed companies, increase quotas for capital flow and develop commodities-trading tools, according to a May 9 statement that gave no details.

Copper for delivery in three months gained 1.9 percent to $6,870 a ton on the LME and the metal for delivery in July added 1.9 percent to $3.1415 a pound on the Comex in New York. Lead, aluminum and zinc rose in London, while tin was little changed.

 
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