Nickel jumps after Indonesia producers reduce output

Nickel rose on Tuesday amid fresh concerns over supply from top producer Indonesia after Tsingshan Group asked nickel pig iron (NPI) producers at its Weda Bay industrial park to cut output to save electricity for aluminium production. Benchmark three-month nickel on the London Metal Exchange rose 1.47% to $18,840 a metric ton, as of 0733 GMT. The most-active nickel contract on the Shanghai Futures Exchange jumped 2.06% to close daytime trading at 144,990 yuan ($21,313.28) a ton. Tsingshan made the request last week to producers of NPI, a key feedstock for stainless steel, Reuters reported on Monday, as the group shifts focus to aluminium after stronger prices helped to improve margins. The group operates NPI and aluminium smelting facilities at Weda Bay, where both businesses rely on captive coal-fired power. The move highlights how the nickel and stainless steel giant's aluminium push has started to squeeze its nickel production. NPI producers at the industrial park are also facing pressure from a nickel ore supply shock due to a sharply reduced mining quota. Eramet said it was planning to halt production at its Weda Bay mine in May, pending clarity on additional quota allocations. Citi analysts said on Monday that aluminium is set for its biggest bull run in 50 years, as the Iran war triggered a major supply shock. They said the conflict could remove about 3 million tons of supply, pushing the market into a structural deficit at a time when spare capacity is near zero and inventories are at a 55-year low. Citi now expects the light metal to surge to $4,000 a ton in the next three months if disruptions to demand remain limited. The London benchmark aluminium ticked 0.10% higher, but the most-traded SHFE aluminium contract gained 1.14%. Among other metals on the LME, copper declined 0.31%, zinc nudged 0.04% higher, lead dropped 0.38% and tin gained 0.35%. On SHFE, copper rose 0.42%, zinc ticked 0.04% higher, lead gained 0.21% and tin added 0.67%.