Nickel Set for Biggest Weekly Gain Since 2009 on Supply

Nickel rallied to a two-year high, exceeding $20,000 a metric ton, as a plant closure in New Caledonia by Vale (VALE5) SA, the second-biggest producer, exacerbated global supply concerns fueled by Indonesia’s ore-export ban.

The contract for delivery in three months on the London Metal Exchange added as much as 5.6 percent to $20,500 a ton, the highest level since February 2012, and was at $20,370 by 4:02 p.m. in Tokyo. The metal, used to make stainless steel, rose 12 percent this week, the most since April 2009.

Vale suspended operations of the plant in the South Pacific nation following a spill of an acid-containing solution, Cory McPhee, a Vale spokesman in Toronto, said yesterday. The Rio De Janeiro-based miner expects to resume production “shortly,” he said. Nickel is the best performer on the LME this year, gaining 46 percent. Indonesia, the biggest producer from mines, banned ore shipments in January.

“Vale’s issues in New Caledonia compound existing market concerns about near to medium term nickel supply,” said Gavin Wendt, the founder and senior resource analyst at Sydney-based Mine Life Pty. “Markets are beginning to fully appreciate the significance of Indonesian supply restriction and the fear of tougher sanction against Russia on Ukraine.”

The potential for more economic sanctions by the U.S. and Europe against Russia helped boost prices, according to Societe Generale SA. Russia, the second-biggest producer of the refined metal, is testing its army’s combat readiness, ramping up tensions after pledging a pullback from Ukraine’s border.

Copper in London was little changed at $6,731 a ton, set for a weekly advance. The contract for delivery in July on the Comex in New York rose 0.3 percent to $3.0705 a pound. In Shanghai, futures for delivery in August added 1 percent to close at 47,270 yuan ($7,587) a ton.

On the LME, aluminum and lead were little changed, while zinc and tin dropped.

To contact the reporter on this story: Jae Hur in Tokyo at jhur1@bloomberg.net

To contact the editors responsible for this story: Brett Miller at bmiller30@bloomberg.net Sungwoo Park, Jarrett Banks

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