METALS-Nickel hits 10-week high on short-covering ahead of Russia sanctions

Credit: REUTERS/JUAN CARLOS ULATE

By Polina Devitt

LONDON, Feb 22 (Reuters) - Nickel prices rose to their highest in 10 weeks on Thursday as concern over expansion of U.S. sanctions against Russia triggered covering of bets on lower prices of the metal used in stainless steel and electric vehicle batteries.

Three-month nickel CMNI3 on the London Metal Exchange was up 1.6% at $17,195 a metric ton by 1125 GMT after touching its highest since Dec. 15 at $17,200 and breaking through the 100-day moving average of $17,052.

"It is all concerns around sanctions, so really just a risk-off (move)," one trader said.

U.S. President Joe Biden said that Washington plans to announce a major sanctions package against Moscow on Friday. Russia, a major producer of refined nickel, palladium and aluminium, is approaching the two-year anniversary of its invasion of Ukraine on Feb. 24.

Western leaders have also expressed outrage at the news from Russian authorities that Russian opposition leader Alexei Navalny died in prison last week.

Despite the market reaction, the real impact on the supply and demand from any possible sanctions on Russian base metals would be limited because the U.S. reduced Russian imports after imposing high tariffs on them a year ago.

The nickel market is also oversupplied because of rising production in Indonesia.

Other LME metals registered modest moves as markets reopened in top metals consumer China after the Lunar New Year holiday.

"Sentiment remains focused on the U.S. Federal Reserve messaging and the timing of interest rate cuts, coupled with fears over the health of China's real estate sector and stimulus expectations," said Standard Chartered analyst Sudakshina Unnikrishnan.

The macroeconomic situation would improve for base metals in the second half of 2024, leading to higher prices across the complex apart from nickel, Unnikrishnan added.

In other metals, LME aluminium CMAL3 lost 0.1% to $2,216.50, copper CMUC3 firmed by 0.1% to $8,550.50, zinc CMZN3 added 0.1% to $2,396, lead CMPB3 dipped 0.2% to $2,073 and tin CMSN3 was down 0.7% at $26,105.

(Reporting by Polina Devitt in London Additional reporting by Siyi Liu Editing by David Goodman)

((polina.devitt@thomsonreuters.com; Reuters Messaging: polina.devitt.thomsonreuters.com@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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