Shanghai nickel jumps to fresh high on supply disruption fears

SHANGHAI, Aug 30 (SMM) – The most-traded nickel contract on the Shanghai Futures Exchange jumped to an all-time high on Friday August 30 as a waste spill at Metallurgical Corp of China’s (MCC’s) nickel plant in Papua New Guinea sparked concerns about supply disruption. 

The SHFE nickel October contract surged as much as 2.6% to hit a record 130,100 yuan/mt on the morning of Friday August 30, extending increases from the previous session. Prices of London nickel held on to gains after it climbed to the highest in six trading days and ended at $16,295/mt overnight. 

The latest SMM survey found that MCC’s Ramu nickel plant maintained normal operation as of August 30. 

According to Papua New Guinea’s minerals authority on Thursday, the plant faces compensation claims and possibly closure after the waste spill incident. 

As the world’s largest producer of nickel intermediate produced through hydrometallurgical processes, the Ramu plant produces 35,353 mt in metal content of such products in 2018, which accounted for 108.44% of its expected capacity, industrial data showed. It officially commissioned in 2012, with construction beginning in 2006.

Most of Ramu’s products were supplied to China to make batteries for electric vehicles. Customs data showed that hydrometallurgical nickel intermediate products originated from Papua New Guinea took up over half of China’s total imports since 2015. 

SMM forecasts that disrupted production at the plant would affect operation of nickel sulfate producers in China, who currently use hydrometallurgical nickel intermediate by a proportion no less than 50% among total nickel raw materials.