September 3, 2019 / 4:05 AM / 3 months ago

METALS-Shanghai nickel hits record high on Indonesia ore export ban

(Updates prices)

By Mai Nguyen

SINGAPORE, Sept 3 (Reuters) - Shanghai nickel jumped to a record high on Tuesday, after top supplier Indonesia said it would ban exports of nickel ore from next year.

The most-traded nickel contract on the Shanghai Futures Exchange jumped as much as 8.9% to a record high of 149,190 yuan ($21,034.01) a tonne, while London nickel rallied as much as 3.6% to $18,710 a tonne.

Both contracts eased later in the session, with London nickel edging up 0.1% and Shanghai nickel rose 7.1% at 0722 GMT.

Nickel ore exporters from Indonesia will have to stop all shipments from Jan. 1, 2020, regardless of any standing contract, two years earlier than initially indicated and raising fears of supply shortages for the stainless steel industry.

“With resources in the Philippines severely depleted compared with 2014 when Indonesia last banned exports, the ability of China to find other sources is limited. This saw traders scrambling to secure supply,” said ANZ in a note.

FUNDAMENTALS

* TRADE FRICTIONS: China has lodged a complaint against the United States at the World Trade Organization over U.S. import duties, saying the latest tariff actions violated the consensus reached by Chinese and U.S. leaders in a meeting in Osaka.

* CHINA: A credit-fuelled stimulus splurge could hurt China’s credit rating more than the immediate hit from U.S. trade tariffs, S&P Global’s main analyst for the country says.

* PRICES: London copper fell 0.5%, aluminium was down 0.4%, zinc decreased 1%, while lead declined 0.4% and tin dropped 1%. Shanghai copper dipped 0.7% while tin jumped 1.3%.

* NICKEL SPREAD: The premium of LME nickel cash over the three month contract MNI0-3 has dropped to $58 a tonne from $104 in the previous session, indicating that tight supply has relaxed slightly.

* PHILIPPINE NICKEL: Philippine nickel mining companies are likely to boost production next year when Indonesia bans exports of the ore, but may still not be able to fill up the ore supply gap.

* INDONESIAN NPI: Indonesia may be able to plug an expected shortfall in nickel pig iron (NPI) supplies, caused by its nickel ore export ban starting next year, by boosting its own capacity to replace China’s NPI output.

* COBALT: Cobalt prices have scaled a six-month peak on expectations of shrinking supplies after top producer Glencore announced plans to shut its Mutanda mine in the Democratic Republic of Congo.

* LITHIUM: Having raced to ramp up lithium production over the past five years to exploit surging prices, Australian producers are now scrambling to cut supplies as prices plummet on falling demand in the world’s top electric vehicle market. [nL3N25T41A

* For the top stories in metals and other news, click or

PRICES

Three month LME copper

Most active ShFE copper

Three month LME aluminium

Most active ShFE aluminium

Three month LME zinc

Most active ShFE zinc

Three month LME lead

Most active ShFE lead

Three month LME nickel

Most active ShFE nickel

Three month LME tin

Most active ShFE tin

ARBS ($1 = 7.0928 Chinese yuan renminbi) (Reporting by Mai Nguyen; editing by Sherry Jacob-Phillips and Rashmi Aich)

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