How is Glencore Influencing the Nickel Price Today?
Since Glencore announced plans to reduce its annual zinc and lead output, it's been influencing the nickel price today. Here's how.
As those watching the zinc space are by now well aware, Glencore (LSE:GLEN) announced in early October that it plans to cut its annual zinc output by 500,000 tonnes. It will also reduce its yearly lead production by 100,000 tonnes.
The zinc price has understandably reacted positively to the news, and interestingly, the nickel price today has also been boosted by Glencore’s news. According to Reuters, LME nickel, which hit a seven-year low of $9,100 per tonne this past August, rebounded on the announcement, buoyed by speculation that the major miner may also reduce its nickel output. On October 13, a few days after Glencore’s news was released, the base metal was trading at $10,460; a week later it was still fairly strong at $10,275 for cash buyers.
While that’s good news for nickel-focused investors, it’s important to remember that as yet Glencore has not commented on whether it will indeed cut its nickel output. Hopes are certainly strong that it will do so, however — earlier this year, the commodities giant also announced cuts to its copper and coal production, and Reuters states that nickel has underperformed for the company “even more so than copper and zinc.”
Investors will no doubt be waiting with bated breath to see if Glencore does reduce its nickel output. After all, if the mere hope that it will do so can provide a price uptick, there’s no telling what an actual reduction could do. As Minelife commodities analyst Gavin Wendt has suggested, “n nickel, as in copper and zinc, an output cut by Glencore could have an immense impact.”
MCR Price at posting:
27.0¢ Sentiment: Buy Disclosure: Held
