Shanghai nickel jumped on Monday to its highest level in nearly four months, helped by rising ore prices, tightened supply from top producer Indonesia and firm demand from the stainless steel sector.
The most-traded October nickel contract on the Shanghai Futures Exchange was up 3.2% at 171,050 yuan ($23,549.90) per metric ton, as of 0434 GMT, after rising as much as 4.8% earlier to its highest since May 9 at 175,740 yuan.
Indonesia, which is the top exporter of nickel products to China, recently delayed issuing mining quotas, resulting in elevated prices and tightened supply of nickel ore.
“Issues of ore supply from Indonesia, together with better sentiment in China demand, pushed up nickel prices,” said a Chinese trader.
China’s stainless steel production, the main nickel-using sector, rose 33.5% in July from a year earlier, said CITIC Futures, adding more production was expected in the coming months due to a traditional strong demand season.
The most-traded stainless steel contract (SHSSU3) also rallied recently, amid a broad rise in industrial goods as China rolled out more stimulus to boost its property and economy.
Meanwhile, a firm dollar weighed on the market. A stronger greenback makes dollar-denominated metals less affordable for buyers holding other currencies.
Three-month nickel on the London Metal Exchange lost 0.4% to $21,010 per metric ton.
Investors are now awaiting key U.S. services and Chinese trade and inflation data due out later in the week for further direction.
