April 19, 2018 / 5:50 AM / 3 months ago

METALS-Nickel soars 9 pct to 3-year high on Russia sanctions scare

 (Recasts, adds Nornickel official's comments, updates prices)
    By Manolo Serapio Jr
    MANILA, April 19 (Reuters) - Nickel surged more than 9
percent on Thursday to its strongest level since late 2014 on
fears U.S. sanctions on major Russian aluminium producer Rusal
may be broadened and could hit key Russian nickel supplier
Nornickel.
    It was the second straight session of sharp gains for
nickel, adding to Wednesday's 7.5-percent spike, spurred by
worries over tighter global supply for a commodity already in
deficit.
    Three-month nickel on the London Metal Exchange
rallied as much as 9.3 percent to $16,690 a tonne, the highest
since December, 2014. The metal, used to make stainless steel,
was up 7.3 percent at $16,395 by 0702 GMT.
    "Pretty clearly there is a lot of smoke. And pretty clearly
the U.S. has Russia in its sights for a number of reasons known
to them," said UBS analyst Lachlan Shaw.
    "A logical extension would be if you were to broaden
sanctions, then Norilsk would fall under that remit."
    Russia's Norilsk Nickel, or Nornickel, is the
world's second-biggest nickel producer.
    An official for Nornickel this week dismissed the idea of
the prospect of sanctions on the company driving up the nickel
price.
    "I think it's just normal fluctuation in the market. If you
look at it broadly, the financial play in commodities has
increased a lot," Anton Berlin, marketing director at Nornickel
told Reuters on the sidelines of an industry conference in
Shanghai.
    U.S. President Donald Trump has delayed imposing additional
sanctions on Russia and is unlikely to approve them unless
Moscow carries out a new cyber attack or some other provocation,
a senior administration official said on Monday.
    "Unlike aluminium, which saw explicit sanctions against
Rusal, there have been no explicit sanctions against nickel
producers," Commonwealth Bank of Australia analyst Vivek Dhar
said in a note.
    "However, markets are still concerned Norilsk Nickel, which
is linked with both Rusal and sanctioned oligarch Oleg
Deripaska, could eventually face sanctions."
    LME aluminium sustained a weeks-long rally on
Thursday, hitting its highest level in almost seven years. The
metal climbed as far as $2,664.50 a tonne, its loftiest since
August 2011, and was last up 3.5 percent at $2,627.
    Aluminium has risen by nearly a third since the United
States announced sanctions against UC Rusal, the
world's No. 2 aluminium producer, on April 6. Nickel has gained
almost a quarter this month.    
    
    SHANGHAI NICKEL: The most-traded nickel on the Shanghai
Futures Exchange rose as much as 5.9 percent to 109,790
yuan ($17,514) a tonne, its strongest level since June, 2015,
before closing at 108,120 yuan, up 4.2 percent.
    SHANGHAI METALS: Aluminium and zinc prices in Shanghai also
raced higher. Shanghai aluminium rose 3.4 percent to
15,380 yuan per tonne and zinc climbed 2.9 percent to
24,530 yuan.
    NICKEL DEFICIT:  The global nickel market deficit narrowed
to 2,500 tonnes in February from a revised deficit of 15,800
tonnes in the previous month, the International Nickel Study
Group said.
    CHINA BAN: China will ban the import of 16 more scrap metal
and chemical waste products from the end of this year, the
environment ministry said. The 16 banned products include steel
smelting slag containing more than 25 percent of the metal
manganese, and ethylene polymer waste.
    BHP IRON ORE: BHP Billiton Ltd cut its 2018
fiscal year iron ore output guidance, citing issues in its
railroad car unloading system, after reporting an 8 percent rise
in third-quarter iron ore production.    
    U.S. ALUMINIUM: Aluminium prices in the United States have
soared and are expected to diverge from those traded on the LME
after the U.S. Treasury Department imposed sanctions on Rusal.

            
 BASE METALS PRICES                                   0702 GMT
 Three month LME copper                                 7052.5
 Most active ShFE copper                                 51940
 Three month LME aluminium                                2627
 Most active ShFE aluminium                              15380
 Three month LME zinc                                   3271.5
 Most active ShFE zinc                                   24525
 Three month LME lead                                     2387
 Most active ShFE lead                                   18345
 Three month LME nickel                                  16395
 Most active ShFE nickel                                108120
 Three month LME tin                                     21635
 Most active ShFE tin                                   145750
                                                              
 BASE METALS ARBITRAGE                                        
 LME/SHFE COPPER              LMESHFCUc3                366.03
 LME/SHFE ALUMINIUM           LMESHFALc3              -3757.14
 LME/SHFE ZINC                LMESHFZNc3                137.99
 LME/SHFE LEAD                LMESHFPBc3                 98.87
 LME/SHFE NICKEL              LMESHFNIc3             -13414.08
 ($1 = 6.2687 Chinese yuan)

    
 (Reporting by Manolo Serapio Jr.
Additional reporting by Melanie Burton in Melbourne and Tom Daly
in Shanghai
Editing by Gopakumar Warrier and Joseph Radford)
  
 
 
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