Nickel rises on concerns over sulphur supply via Hormuz

Nickel rose to a three-week high on Thursday as concern over disruptions to traffic through the Strait of Hormuz raised fears of sulphur supply shortages, threatening a key raw material for production. Benchmark three-month nickel on the London Metal Exchange climbed 2.57% to $17,235 a metric ton by 0700 GMT. It was up by as much as 3.14% earlier in the session, marking the biggest increase since May and the highest price since June 23. The most-traded nickel contract on the Shanghai Futures Exchange was up 3.01% at 132,940 yuan ($19,641.85) a ton. "Sulphur supply tightness expectations are fermenting again. For nickel, this mostly means an upward shift in cost expectations for the high-pressure acid leaching process," analysts from Chinese broker Jinrui Futures said in a note, referring to a process used to extract nickel from ore. Indonesia, the world's biggest nickel producer, relies on the Middle East for about 75% of the sulphur used in sulphuric acid for leaching metal from ore. U.S. and Iranian blockades of the Strait of Hormuz and military operations have disrupted shipments through the vital shipping corridor. Copper was steadier, helped by weaker U.S. inflation data and hopes of a more dovish stance from Federal Reserve. It was also supported by supply worries and recent withdrawals from LME warehouses. The metal rose 0.27% on the LME and dipped 0.23% on the SHFE. U.S. producer prices posted their biggest decline in 14 months in June, data released on Wednesday showed, adding to a string of U.S. reports that have cooled expectations for Fed interest rate hikes. Lower borrowing costs can support metals demand because they tend to help economic activity. Among other LME metals, aluminium gained 0.68%, zinc rose 0.85%, lead climbed 1.19% and tin firmed 1.35%. On SHFE, aluminium was little changed, zinc lost 0.68%, lead added 0.38% and tin fell 1%.