Nickel leaps to highest in over two years, copper extends gain

Shanghai - Nickel surged to the highest level in more than two years, and copper chalked up its best mark since 2014, as bets on tighter markets, especially in top consumer China, keep most metals buoyant after their longest run of weekly gains in a decade.

Nickel advanced as much as 2.9% to $12 380 a metric ton on the London Metal Exchange, its highest since June 2015, before trading at $12,135 by 3:43pm  in Shanghai. Copper climbed as much as 1.3% to $6 920.25 a ton. Most metals rose after the LME Index of six contracts capped an eight-week advance last Friday - one short of a record run in 2006.

“It certainly feels like there is a broad resetting of expectations that are driving the metals at the moment,” Daniel Hynes, senior commodities strategist at Australia & New Zealand Banking, said by phone from Sydney.

“I was in China last week and I got the very strong impression that the environmental push is having a pretty profound impact, and that’s not something that’s going to fall away quickly.”

The gains weren’t uniform, however, with aluminum falling in London and on the Shanghai Futures Exchange.

Industrial metals have been buoyed by sustained demand growth and restrained supply. In China, environmental inspections and planned anti-pollution curbs on steel and aluminum have stoked expectations of shortages. Gains are also fuelled by a weaker dollar, a stronger Chinese currency, and a super-charged steel market in China that’s steering sentiment for other commodities.

Hot-rolled coil, a major steel product, reached a fresh record on the SHFE, closing 0.8% higher. The steel rally has a “blow-on” effect on the whole metals sector, Hynes said. “To an extent they are related by demand, so it’s not surprising they get pulled along.”

Miners are gaining from the metals surge, with the Bloomberg World Mining Index of shares rising for an 11th day to the highest since September 2014, with top Chinese producer Jiangxi Copper adding 3.2% in Shanghai and copper-zinc miner MMG rising 3.9% in Hong Kong.

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