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Copper, nickel prices spike as Europe scrambles for metal

Arctic Sea ship Norilskiy Nickel on the river Elbe with destination port of Hamburg. (Reference image by Buonasera, Wikimedia Commons).

On Wednesday, copper prices continued to rise with May futures jumping to a high of $4.7050 a pound ($10,373 a tonne) in New York, levels last seen during the bellwether metal’s October spike – in sight of record territory.

Aluminum hit a record high of $3,590 a tonne and the price of nickel raced to an 11-year peak above $25,000 a tonne.

Concerns about supply disruption and low global stockpiles are behind the move higher, trumping concerns over the impact of the Ukraine invasion on global growth, rising interest rates in the developed world and a slowing economy in China.  

Chile, responsible for more than a quarter of global copper production, recorded its lowest January output since 2011, government figures showed on Monday.  

While warehouse inventories have been rising in China as the country’s copper refiners, responsible for more than half the world’s output, restock, global levels remain stressed. In February, global copper inventories held by LME, Shanghai Futures Exchange and Comex in New York fell to just 200,000 tonnes – scarcely enough to cover three days of global consumption.

Russian disruption

“There are more signs that geopolitical risks have turned into supply disruptions,” investment bank ING said in a report quoted by Shanghai Metals Market, after the world’s three largest container shipping companies suspended shipments to Russia.

ING said there are signs metal flows in Russia are increasingly limited due to transport problems.

Rusal is the biggest aluminum producer outside of China and Norilsk accounts for about 10% of refined nickel output globally.  Global nickel stockpiles are at their lowest levels since 2019. 

Bloomberg reports supplies are especially tight in Europe and spiking premiums for cash metal in Europe had prompted traders to switch 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.”

[Click here for an interactive chart of nickel prices dating back to 1989]