Nickel Leads Metals Rally as Goldman Sees Gains on Supply Issues

  • Goldman sees nickel at $12,000 in 6 months on Philippine mines
  • Freeport helps mining stocks touch highest in almost a year

Nickel rallied to an eight-month high amid expectations for supply cuts in the Philippines, the top miner, and as the outlook for more economic stimulus buoyed metals. Zinc rose to the highest in more than a year, while copper producers including Freeport-McMoRan Inc. advanced.

Nickel climbed as much as 4.7 percent to $10,515 a metric ton. It will touch $12,000 in six months, according to a new baseline scenario from Goldman Sachs Group Inc. that assumes a quarter of Philippine output is lost over the period. The new government has said mines falling short of environmental and welfare standards will be shuttered, and has ordered an audit of operations.

“The results of the audit will be critical to the outlook for nickel,” Goldman analysts including Jeff Currie and Max Layton wrote, noting there appears to be no readily available alternative source of ore for China, the biggest producer and consumer.

Nickel for delivery in three months rose 4.4 percent to settle at $10,490 a ton at 5:50 p.m. on the London Metal Exchange. It earlier touched the highest intraday since Oct. 29.

Other industrial metals also advanced as global equities climbed on the outlook for more monetary easing in major economies. Japanese Prime Minister Shinzo Abe said he would order ministers on Tuesday to begin compiling a stimulus package. The Bank of England is forecast to cut interest rates Thursday, and traders are betting there will be further monetary easing in the euro area.

Copper inventories in LME warehouses climbed to the highest since February as stockpiles in Singapore jumped 11 percent to highest since 1999. The increase in Asian inventories has led to speculation that some metal has left Chinese warehouses and entered those registered with the LME.

The Bloomberg World Mining Index rose to the highest since last July, led by gains in companies including Freeport and First Quantum Minerals Ltd., which both climbed more than 9 percent.

In other metals news:

  • Copper, lead, aluminum and zinc all rose more than 1 percent on the LME. Tin gained 0.6 percent.
  • Copper futures for September delivery rose 3.1 percent to $2.213 a pound on the Comex in New York.
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