Key Takeaways
- Nickel prices increased by nearly 2% on Thursday.
- Concerns over disruptions through the Strait of Hormuz led to fears of sulphur supply shortages.
- Benchmark nickel on the London Metal Exchange reached $17,110 a metric ton.
Nickel prices surged by nearly 2% on Thursday as concerns over potential disruptions in traffic through the Strait of Hormuz intensified worries about sulphur supply shortages. This key raw material for production saw its benchmark three-month price on the London Metal Exchange climb to $17,110 a metric ton by 0300 GMT.
Analysts from Jinrui Futures highlighted that expectations of tightness in sulphur supply are fermenting again, particularly for nickel. They noted that this situation could lead to an upward shift in cost expectations for the high-pressure acid leaching process used to extract nickel from ore. Indonesia, the world’s largest producer of nickel, relies on the Middle East for about 75% of its sulphur needs.
The Strait of Hormuz, a vital shipping corridor, has been disrupted by US and Iranian blockades as well as military operations, affecting shipments through this critical route. This disruption has raised fears among traders and producers that supply chains could be severely impacted, leading to increased prices for nickel and other metals dependent on sulphuric acid.
While copper prices remained steady, supported by weaker US inflation data and hopes of a more dovish Federal Reserve stance, the overall market sentiment was influenced by ongoing geopolitical tensions. Copper rose 0.17% in London and dipped 0.28% in Shanghai, reflecting mixed signals from global economic indicators.
Other metals also showed varied movements on the London Metal Exchange (LME). Aluminium prices increased by 0.43%, zinc gained 0.58%, lead added 0.35%, while tin saw a slight dip of 0.15%. On the Shanghai Futures Exchange (SHFE), aluminium dipped 0.13%, zinc lost 0.87%, lead dipped 0.1%, and tin dropped 1.67%.
Analysts from Jinrui Futures stated, '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.' This statement underscores the significant impact that geopolitical tensions can have on global commodity markets.
'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 Jinrui Futures, Chinese broker
