Copper close to record, zinc at 15-year high, nickel nears $28,000 as metal price rally gains momentum

Harjavalta nickel smelter in Finland (Credit: Boliden)

On Thursday, copper prices rallied for a third straight session with May futures jumping to a high of $4.7825 a pound ($10,545 tonne) in New York, levels last seen in May last year when the bellwether metal hit an all-time high.

Industrial metals traded on the London Metal Exchange rallied across the board.

Aluminum hit another record of $3,710 a tonne as traders scramble for physical delivery with inventories cut in half over the past year – from some 2 million tonnes in March 2021 to just over 800,000 tonnes.

Nickel jumped 6% to its highest since April 2011 at $27,815 a tonne, with premium for prompt delivery metal rising above $600 a tonne again after touching a record $645 last week. LME-registered warehouse inventories are below 80,000 tonnes, a level dating back to 2019, with 52% of that booked for delivery, according to a Reuters report. 

Zinc joins rally

Zinc topped $4,000 a tonne for the first time in nearly 15 years after rising some 4% during the day. Zinc inventories are at their lowest point since July 2020.

Zinc prices are playing catchup with the rest of the complex with Eoin Dinsmore, head of base metals demand and markets research at CRU Group, telling Bloomberg News that the full extent of the supply problems has not been fully factored in yet:

“Zinc has been slower to price in the supply risk, and to an extent it’s true across the board. Metals are still just waking up to the problems this could cause.” 

Lead climbed nearly 1% to $2,422 while tin’s runaway rally continued with another fresh all-time high of $46,475 a tonne.

Concerns about supply disruption, historically low global stockpiles and rocketing energy costs have lit a fire under base metals, trumping concerns over the longer term impact of the Ukraine invasion on global growth, rising interest rates in the developed world and a slowing economy in China.  

Europe scrambles for physical metal

“This Russia and Ukraine conflict has only fanned the flames of the already stretched base metals markets,” Reuters quoted ING analyst Wenyu Yao as saying:

“All energy prices are through the roof and that will add more risk to production in Europe which will provide the catalyst to a rally.”

Earlier in the week, the world’s three largest container shipping companies suspended all shipments to Russia.

Bloomberg reported on Wednesday the market is so tight in Europe that traders have been switching to break-bulk vessels to ship metal all the way from warehouses in Malaysia’s Port Klang – even before the war broke out:

“Large volumes of aluminum as well as copper flow regularly from St. Petersburg in Russia to the European ports of Rotterdam and Vlissingen and are at threat of disruption as the chaos in shipping markets spreads.”