Nickel 2 year highs

METALS--Supply troubles help nickel to two-month highs
16/02/17 22:02

1. 
   A view of nickel-ore mine Zambales Diversified Metals Corporation ordered closed by Environment secretary Regina Lopez in Sta Cruz Zambales in northern Philippines, February 7, 2017.
   • Large stocks of nickel could deplete quickly
   • Indonesian nickel ore exporters face hurdles
   • China credit growth to fuel metals demand
   (Recasts, adds comment, changes dateline from Melbourne)
   Nickel prices rose to two-month highs on Thursday on escalating concern about supplies after the suspension of mines in top ore producer the Philippines and its decision to cancel contracts for undeveloped mines.
   Benchmark nickel CMNI3 on the London Metal Exchange was up 0.1 percent at $10,930 a tonne by 1033 GMT. Earlier the stainless steel ingredient hit a high of $11,055.
   The Philippines this week ordered the cancellation of 75 mineral production-sharing agreements as developing them would threaten water supply. That came after the closure or suspension of 28 of the country's 41 mines.
   "Stocks of nickel are still fairly large, but they could come down pretty fast," said SP Angel analyst John Meyer. "Indonesia did partially relax the ban, but it may not make a difference to ore supplies."
   Indonesia eased a three-year ban on nickel ore exports in January. However, analysts say the rules accompanying the relaxation on using local smelter capacity to process low-grade ore is a hurdle that some firms may not be able to jump.
   Stocks of nickel in LME-approved warehouses stand at around 380,000 tonnes, while those in warehouses monitored by the Shanghai Futures Exchange total 89,000 tonnes. They account for more than 20 percent of global consumption estimated at roughly 2 million tonnes this year.
   Elsewhere copper was down 0.5 percent at $6,036 a tonne, holding near a 21-month high of $6,204 touched this week.
   Its gains have been fuelled by a strike at BHP Billiton's Escondida mine in Chile and a lack of permits for exports from Freeport McMoRan's Grasberg mine in Indonesia.
   Also supportive is the idea of stronger demand in top consumer China, where banks extended 2.03 trillion yuan in net new yuan loans in January, the second-highest monthly tally on record.
   "We find that credit demanded by China’s metals intensive 'old-economy' has been remarkably strong over the past two months, with bullish implications for Chinese fixed asset investment, PMIs and the commodity complex," Goldman Sachs analysts said in a note.
   "The resulting acceleration in metals demand is expected to push the copper market, as well as other metals such as nickel and zinc into deficit, leading to inventory draws ... and higher prices", Goldman said.
   Aluminium was down 0.9 percent at $1,895, zinc CMZN3 slipped 0.5 percent to $2,856, lead CMPB3 lost 0.9 percent to $2,307 and tin CMSN3 gained 0.5 percent to $19,975.
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