Nickel prices hit three-and-a-half-month peak as investors shift from zinc

LONDON — Nickel prices hit a three-and-a-half-month peak on Friday as investors shifted from zinc after a build-up in zinc inventories indicated that shortages had eased.

Rising physical demand from top consumer China also helped lift nickel.

Both metals are mainly used in the steel sector with zinc needed for galvanizing and nickel a key ingredient in stainless steel.

“Traders are seeing a weakening scenario for zinc because the market is not as tight as people expected, while it’s looking a bit more positive for nickel with Shanghai premiums rising,” said Gianclaudio Torlizzi, partner at consultancy T- Commodity in Milan.

“After the very good run that zinc had in June, there’s probably some profit taking and nickel is benefiting from a combination of short covering and some new long exposure.”

Benchmark London Metal Exchange ( LME) nickel closed 0.70% higher at $10,200 a ton after touching $10,290, the highest since April 6. Nickel gained 7.10% on the week.

Tight supply pushed up nickel full-plate premiums in Shanghai to $200-$210 a ton last week from $180-200 the other week, Metal Bulletin reported, the highest since it began nickel premium assessments in 2011.

On-warrant LME zinc inventories — those not earmarked for delivery and therefore available to investors — jumped 17% to 146,125 tons on Friday, having more than doubled in a little over two weeks.

Zinc inventories on the Shanghai Futures Exchange climbed 8.30% to 78,320 tons over the other week.

Three- month LME zinc finished down 0.90% at $2,776 a ton after climbing 18% from June 7 until Wednesday, when it touched $2,857. It gained around 1% last week.

Three- month LME copper ended down 0.10% at $6,325 a ton, but gained 5.40% on the week, the biggest weekly rise since February, while Comex September copper fell 0.10% to $2.88 a pound.

“Copper prices are in pursuit of breaking trend line resistance and moving to the 38.20% Fibonacci retracement area of about $3.00,” Paul Ciana, technical analyst at Bank of America Merrill Lynch said in a note.

LME tin dipped 0.30% to close at $ 20,600 a ton after hitting a six- month high for the second straight day after reports of smelter shutdowns in Yunnan province in China, the world’s largest tin producer.

“China’s largest tin deposits are in this province. However, if production is stopped for only a short time, the effects on tin supply should be limited and the price (would) correct again,” Commerzbank said in a note.

Aluminum finished down 1.60% at $ 1,907 a ton, while lead edged up by 0.50% to end at $2,320. —