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Spot nickel demand up on LME prices

Keywords: Tags  nickel, nickel premium, London Metal Exchange, nickel prices, nickel pig iron, NPI, melting-grade nickel, plating-grade nickel China nickel pig iron

NEW YORK — Spot market nickel trading has picked up, market players said, although metal premiums remain flat.

AMM’s melting-grade premium held at 15 to 25 cents per pound, and plating-grade at 50 to 60 cents per pound.

Meanwhile, the global nickel market experienced a week in which speculation over the future of China’s nickel pig iron (NPI) industry coincided with a rally in nickel prices on the London Metal Exchange.

The LME’s three-month nickel contract rallied earlier this week, closing at a two-month high of $14,745 per tonne ($6.69 per pound) Oct. 22 before edging back to $14,485 per tonne ($6.57 per pound) Oct. 24. However, the latest price remains 4.9 percent above the $13,805 per tonne ($6.26 per pound) seen Oct. 9.

Analysts attributed the rally to fresh buying activity, the end of the U.S. government shutdown and uncertainty over the future of Chinese NPI production. Some expect the latter to be impacted by Indonesia’s ban on ore exports, scheduled to take effect in January.

Spot market participants said the nickel rally was due more to financial speculation that any physical activity, as LME nickel stocks continue to reach record highs.

"Leave it to the hedge funds. ... It has nothing to do with physical nickel," one trader said.

"The only certainty is that there is a large amount of uncertainty when it comes to a ban or tax from the Indonesian government," a second trader said.

Still, some noted an increase in spot trading and upward pressure on premiums as LME stocks are less readily available to the North American market. One trader reported booking multiple truckloads of melting-grade briquette material at a 26-cent premium.

"Business has definitely picked up. ... We get a lot more inquiries. We were making a couple sales a week before, and now we’re getting a couple a day," one producer source said.

"There is a little bit of tightness on the ground," a third trader said. "Generally, we’ve had no deep increase in the premium, but you can’t get any material out of Chicago or Detroit. We had a couple of bigger users come in for truckloads, and nobody had anything on the ground, so we were able to get 26 cents."

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