METALS-Nickel leaps to highest since 2011 as stockpiles dwindle

(Updates throughout, changes dateline to LONDONeline)

LONDON, Jan 14 (Reuters) – Nickel prices surged to their
highest since 2011 on Friday as a supply deficit ate into
stockpiles and investors looked ahead to rising demand from
electric vehicles.

Benchmark nickel on the London Metal Exchange (LME)
was up 2.3% at $22,695 a tonne at 1123 GMT after peaking at
$23,935.

It was set for its biggest weekly gain since August 2019, up
almost 10%. Prices have doubled since March 2020 but are well
short of a record high of $51,800 reached in 2007.

Nickel is mostly used to make stainless steel. Batteries
account for 5% of demand, but that could rise to 30% by 2040,
said WisdomTree analyst Nitesh Shah.

“There is a broad realisation of just how important nickel
is in the energy transition. It’s very, very difficult to see
how supply of class 1 nickel (used for batteries) can keep up
with demand,” he said.

“We’re very bullish. $25,000 is not where it’s going to
stop. We can go much higher than that over the next decade.”

INVENTORIES: On-warrant nickel inventories in LME-registered
warehouses have fallen to 44,832 tonnes, the lowest since 2019
and down from more than 200,000 tonnes in April.

Stocks in Shanghai Futures Exchange (ShFE) warehouses are
close to record lows at 4,711 tonnes. One London trader said
that Chinese buyers were “hoovering up” LME metal.

SPREAD: In a sign that supply is tightening, the premium for
cash nickel over the three-month contract jumped to $287 a
tonne, its highest since 2009.

SUPPLY: The International Nickel Study Group (INSG) last
year predicted a surplus in 2022 after a deficit in 2021.

INDONESIA: Top producer Indonesia is considering an export
tax on some nickel products, Bloomberg reported this week.

PRICES: LME copper was down 0.2% at $9,943.50 a
tonne and up 3% on the week, its biggest weekly gain since
October.

Aluminium was up 0.8% at $2,975 a tonne, zinc
rose 0.4% to $3,576, lead added 0.8% to
$2,377.50 and tin was up 0.6% at $40,750.

(Reporting by Peter Hobson
Additional reporting by Eileen Soreng in Bengaluru
Editing by David Goodman
)
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