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Nickel leaps to 5-year high as Indonesia bans ore exports from December

Kitco News

By Zandi Shabalala

LONDON, Aug 30 (Reuters) - Nickel soared to its highest in five years on Friday on supply concerns after major producer Indonesia said it would ban the export of ore from December.

Nickel prices on the London Metal Exchange (LME) jumped 8% to $17,780 per tonne in official trading rings, their highest since September 2014.

"The rumours that the ban could be brought forward have been pushing higher for the whole summer and the rise today is proof it wasn't fully priced in," said ING analyst Warren Patterson.

The price of the metal, mainly used in stainless steel, is up about 60% this year, far outpacing other base metals.

Indonesia's Energy and Mineral Resources Minister Ignasius Jonan said he has signed a new regulation on restricting ore exports, according to a voice recording verified by a ministry spokesman. Ore exports were originally banned in 2014 but were reopened for certain minerals in 2017 to give miners time to build smelters to process minerals such as nickel, bauxite and copper.

It now only allows miners to export low-grade nickel.

SPREADS: The premium of LME cash nickel to the three-month contract spiked to its highest since at least a decade at $99 a tonne, usually a sign that supply is tightening. POSITIONS: One party has control of 50%-79% of LME inventories, data showed on Friday. MARKET BALANCE: The global nickel market deficit narrowed to 45,100 tonnes in the first half of the year compared to a deficit of 85,200 tonnes in the same period of 2018, according to the International Nickel Study Group. The group sees a deficit of 84,000 tonnes this year compared to a shortage of 146,000 tonnes in 2018, it said in May.

INVENTORIES: On-warrant inventories of nickel in LME-approved warehouses available to the market are up 26% so far this year at around 109,500 tonnes. In Shanghai, data showed nickel stocks plunged 20% to 19,955 tonnes in the week to Friday. WASTE SPILL: Waste from a nickel plant in Papua New Guinea owned by Metallurgical Corporation of China spilled into the adjacent Basamuk Bay at the weekend, adding to supply concerns. MINE CLOSURE: African Rainbow Minerals said it would place its loss-making nickel mine in South Africa on care and maintenance from September 2020 in preparation for closure. The mine, jointly owned by Russia's Norilsk Nickel, produced 13,300 tonnes of nickel in 2018.

PRICES: Copper traded 0.8% lower at $5,680 per tonne, aluminium eased 0.7% to $1,741.50, zinc fell 1.2% to $2,241, lead shed 0.8% to $2,042, while tin inched 0.2% higher at $15,825.

(Additional reporting by Mai Nguyen; editing by David Evans)

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