Shanghai nickel hits three-month high on mounting supply worries

Shanghai nickel extended gains on Wednesday to hit a three-month high, as a Chinese nickel producer slashing output at its Indonesian unit intensified worries about the supply loss of the metal used in stainless steel and electric vehicle batteries. The most-traded nickel contract on the Shanghai Futures Exchange closed daytime trade up 1.2% at 150,550 yuan ($22,040.52) per metric ton. It hit its highest since January 26 at 152,230 yuan earlier in the session. By 0732 GMT, the benchmark three-month nickel on the London Metal Exchange was up 0.31% at $19,510 per ton. The contract hit a nearly two-year high at $19,565 on Tuesday. Nickel prices have already been supported by rising concerns over supply cuts stemming from lower production quotas in major producer Indonesia, while costs have increased due to a shortage of sulphur amid the Middle East conflict. Prices in Shanghai and London have gained 11% and 13% so far in April, respectively. Zhejiang Huayou Cobalt said on Tuesday that its Indonesian unit would temporarily halt some production lines from May 1, slashing about half of the plant's output, after rising sulphur prices lifted costs at one of its key battery-nickel projects. "Indonesian high-pressure acid leach (nickel) producers, representing 14% of global supply, are facing challenges from rising sulphur prices and tightening supplies, keeping prices skewed to the upside," said analysts at Morgan Stanley in a note. Among other SHFE metals, copper slid 0.53%, aluminium dipped 0.1%, lead and zinc were little changed while tin advanced 0.74%. Among other LME metals, copper added 0.54%, aluminium advanced 0.2%, tin rose 1.64%, lead edged up 0.2% while zinc shed 0.18%.