Nickel hits new record high for second day running

Nickel surged to a new record high for a second day running, as the metal remained supported by critically low stocks and strong demand from the stainless steel sector.

Also, a tentative recovery in global equity markets was underpinning prices in all metals, analysts said. London shares opened firmer this morning while over in Asia, the Nikkei and the Hang Seng index both closed higher.

Last week, a global equities slump sparked by a 9 pct plunge in the Chinese stock market last Tuesday sent base metals prices lower on fears slower global economic growth might crimp demand.

At 10.43 am, LME nickel for 3 month delivery was at 42,700 usd a tonne, hitting a new all time high of 43,150 usd earlier. Yesterday, the metal hit what was then an all time high of 42,350 usd.

“Nickel is continuing where it left off yesterday and the day before based on strong fundamentals, (LME) stocks are down again today … stainless steel sector demand is strong,” said BaseMetals.com analyst Martin Hayes.

Stainless steel demand accounts for about 70 pct of total nickel consumption, and Hayes said there is very little evidence this demand is abating or that manufacturers are looking to substitute.

He added there also is very little new supply scheduled to come on stream any time soon and that this, along with the factors listed above, point to “higher numbers down the road”.

The LME said in a daily report that its nickel stocks fell 222 to total 3,426 tonnes. This leaves less than 3,000 tonnes available to the market – equivalent to less than a day’s worth of global consumption.

Tin was up at 13,700 usd a tonne against 13,600 usd at the close yesterday, still benefiting from news out yesterday Indonesia is considering export quotas to put a floor of 12,000 usd a tonne under prices.

“Tin is the other metal we like as we think the market has not taken on board the extent of the potential disruptions,” said BaseMetals.com analyst William Adams.

Tin has surged to ever higher record levels this year as authorities in Indonesia, the world’s largest tin exporter, have begun a clampdown on illegal tin mining.

Lead was up at 1,880 usd a tonne against 1,850 usd at the close yesterday, underpinned by news of a blast at a Zinifex lead smelter at Port Pirie in Australia.

Copper was up at 6,305 usd a tonne against 6,140 usd at the close yesterday, aluminium was up at 2,745 usd against 2,730 usd while zinc was up at 3,400 usd against 3,360 usd.