Nickel prices rose above $16,000 on the London Metal Exchange on Wednesday November 19 on a wave of short covering and amid fresh assurances that Indonesia will keep its ban on ore exports.

Three-month nickel rose $200 on an official basis, settling at $15,900/905 per tonne, from its previous official price of $15,700/705.

Nickel prices then rallied further to hit a high of $16,280 per tonne, from an intraday low of $15,624.

Market participants covered shorts as cancelled warrants rose and nearby spreads tightened.

The cash to three-month nickel spread settled in a $55 contango on Tuesday and Wednesday, compared with $60 on Monday.

Sentiment has improved since Citi released a note on Tuesday stating that there would be no curtailment of the Indonesian ore ban.

“From miners who have been forced to cease operations in Indonesia and those who have had to cut back mining activity significantly to feed only domestic processing plants in Indonesia, to government ministries implementing the ban measures, the message is very clear – there is no expectation of any form of relaxation of the current export ban measures,” analysts at Citi said in the note.

The comments have come at a time when there have been rumours that China is trying to negotiate some exemptions to the ban.

“The market is reacting because there has been another affirmation from Indonesia that they are not going to do anything to water down the ban […] it’s the first affirmation from the current government that the ban will stay in place,” an analyst told Metal Bulletin.

“And there are a few other indicators that look a bit more positive as well – NPI [nickel pig iron] prices have gone up, premiums for standard LME nickel have picked up and trade data released tomorrow is likely to show a big fall in [the] volumes of refined nickel that China is exporting and a sharp drop in October imports of Philippine nickel ore,” he added.

Nickel stocks in LME-approved warehouses stood at 390,432 tonnes on Wednesday, after 234 tonnes were added overnight. Cancelled warrants – material waiting to be delivered out of warehouses – increased by over 5,000 tonnes.

Three-month copper settled at $6,643/44 per tonne, from its previous official price of $6,615/17.

Stocks of the red metal stood at 160,825 tonnes in bonded warehouses after 400 tonnes were added overnight.

Three-month aluminium settled at $2,014/15 per tonne, from its previous official price of $2,005/5.50.

Stocks of the light metal in LME-approved warehouses dropped 11,525 tonnes overnight to stand at 4,371,525 tonnes.

Chloe Smith
Twitter: ChloeSmith_MB