LIVE FUTURES REPORT 08/08: LME nickel price soars 11% to $16,690/t in continued buying frenzy

The three-month nickel price on the London Metal Exchange continued its upward trajectory during morning trading on Thursday August 8, rallying by more than 11% to reach its highest level in 18 months.

Nickel’s futures price reached an intra-morning high of $16,690 per tonne, appreciating by more than $1,800 per tonne, while more than 10,600 lots have already traded as at 9am London time.

In what traders have called a broadly technical move, the metal’s three-month price breached $15,100 per tonne - a key technical threshold - after the 5pm close on Wednesday, to reach a year-to-date high of $15,500 per tonne.

“It is entirely reasonable to say that the price move reflects nothing except a panic reaction and the market is behaving much as it did when people assumed [Russian nickel producer] Norilsk would be subject to the same sanctions as [Russian aluminium producer] Rusal,” Kingdom Futures director and chief executive Malcolm Freeman said in a morning note.

“With [Thursday’s] range so far being $15,335-16,690 per tonne, it on the surface looks like the end of the panic reaction has taken place with stops being triggered and option books being hedged and re-hedged endlessly over the last twelve hours,” he added.

Elsewhere in the complex, fresh cancelations in LME aluminium have continued over the week, with some 24,825 tonnes booked for removal out of LME-registered warehouses in Port Klang, Malaysia, this morning, with the LME’s daily warehouse stock report factoring in a two-day delay.

The LME’s aluminium stockpile in Port Klang remains the largest across the entire LME warehouse network, holding some 516,775 tonnes in total, yet amid a continued trend of volatile stock moves, more than 170,000 tonnes of material is now canceled in Port Klang, which is also the most across the LME network.

Despite the outflows, aluminium’s three-month price continues to trade lower, recently trading at $1,766 per tonne, while volumes traded remained low over the morning, with just over 3,200 lots exchanged as at 9.50am London time.

In macro news, China’s latest export data showed unexpected growth over July, despite continued concerns over mounting United States-imposed tariffs on Chinese goods, with July exports climbing 3.3% year-on-year.

That said, imports into China declined over the July period, with as 5.6% drop suggesting that the country’s domestic economy continues to slump, albeit improving against June’s drop of 7.3%.

Other highlights

  • The zinc-lead price differential, or switch, continues to narrow as it has done in recent weeks, recently seen at $237 per tonne. The switch breached $1,000 per tonne in April, when zinc’s three-month price neared $3,000 per tonne.
  • The dollar index was down by 0.17% this morning at 97.43.
  • In other commodities, Brent crude oil futures were down by 0.02%, dipping below the $60-per-barrel threshold to recently trade at $57.41 per barrel.
  • In data on Thursday, China’s dollar-denominated trade surplus narrowed to $45.1 billion from $51 billion previously, but beating the expected surplus of $43.2 billion.
  • In addition, German industrial production figures on a month on month basis for the July period were down by 1.5%, missing an expected slide of 0.5% and down from a drop of 0.1% at the prior reading.
  • Later on Thursday, the European Central Bank’s economic bulletin is of note.
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