Shanghai Nickel Surges to Three-Month High Amid U.S. Sanctions on Russia

Nickel in the Shanghai Futures Exchange has reached its highest level in three months. This is due to the expansion of U.S. sanctions against Russia and growing concerns over supply in Indonesia.

According to the Shanghai Futures Exchange (SHFE) on the 26th, the price of nickel in March closed at 135,220 yuan ($18,784.74) per ton on the 23rd, up 4.1% from the previous day. This is the highest level in three months since November 20th last year. The weekly increase rate is 7.7%, the highest since June last year.

This is observed to be due to the expansion of U.S. sanctions against Russia. Earlier, U.S. President Joe Biden announced large-scale sanctions against more than 500 individuals and organizations related to Russia on the 23rd. Export control measures for about 100 organizations will also be implemented separately.

Russia is one of the major producers of refined nickel and aluminum. Experts believe that these sanctions from the U.S. pose a potential risk to Russia’s supply of nickel and aluminum.

The sluggish approval process for mining quotas in Indonesia, the world’s largest nickel producer, was also impacted. Indonesia is reviewing applications for mining quota approvals for the next three years, and as the final results are delayed, the supply of nickel ore is expected to decrease.

The situation is not good for other minerals due to restrictions on Indonesian ore supply. In particular, due to supply delays, Indonesia’s refined tin exports dropped by 99% to 400kg in January. It is expected to affect not only the price of nickel but also the prices of other minerals.

An analyst at CITIC Futures said, “Concerns about a shortage of ore supply have resurfaced as the process of approving mining quotas in Indonesia is slow.”

Meanwhile, the 3-month nickel CMCU3 on the London Metal Exchange (LME) on the 23rd (local time) maintains its highest level in 14 weeks at $17,450 per ton.