The WSJ reports,"nickel prices soared above $20,000 a metric ton for the first time in over two years as worries about reduced supply bolstered investor appetite Friday for the industrial metal.
Nickel for three-month delivery on the London Metal Exchange traded as high as $20,500 a ton, closing up 2.6% at $19,905 a ton. Prices are up 43% this year and ended the week at a two-year high".
"Nickel’s latest surge came after Vale SA suspended production at its Goro nickel processing plant and mine in New Caledonia due to an acid leak that reached a nearby river. The spill prompted an intervention by local authorities, who described the incident as “serious” and called for “emergency” measures. Vale, which is the world’s No. 2 nickel producer, is waiting to hear from the local government before it can restart operations", a spokeswoman said late Thursday.
Vale’s Goro mine doesn’t account for a significant slice of global production, said Leon Westgate, analyst with Standard Bank in London. Goro is capable of producing 60,000 metric tons of nickel, versus about 2 million tons of global output.
However, the shutdown comes after Indonesia, the world’s largest producer of the metal, banned exports of nickel ore in January with the aim of germinating a domestic metals refining industry. Metals traders have also worried that international trade sanctions against Russia, the world’s second-largest nickel producer, could further restrict supply of the key ingredient in stainless steel.
Indonesia, which accounts for 28% of global nickel supply, has surprised some traders with its firm stance on the export ban. Many had expected authorities to relent as reduced export revenues hurt Indonesia’s economy.
Indonesia’s processed nickel production is likely to grow roughly tenfold over the next five years to 260,000 metric tons by 2018, from about 21,000 tons in 2013, as it attracts investment in nickel processing plants, said David Wilson, director of metals research and strategy with Citigroup.
But that won’t help supplies in the short term, and will lead to higher prices when even a small amount of production goes down elsewhere, traders said.
