×

METALS-Nickel soars on rising demand from electric car battery makers

(Adds analyst quotes, details, updates prices)

SYDNEY, Nov 1 (Reuters) - Chinese nickel futures rocketed to their daily limit in early trade on Wednesday, tracking overnight gains in London as the sector turned positive on the prospect of new demand from electric vehicle battery manufacturers.

Nickel staged a fast ascent on the Shanghai Futures Exchange (ShFE) following strong interest in the London Metal Exchange (LME) three-month benchmark contract on Tuesday.

"What we're seeing is a reaction to a new demand market for nickel in electric cars, first in London, then in Shanghai nickel," said Amy Li, a metals analyst for National Australia Bank. "This is a demand, not a supply story."

ANZ Bank commodities specialists noted the market was becoming increasingly confident about its place in the electric car movement, with producers and traders at the London Metal Exchange Week annual gathering speaking positively about the growth in demand expected from this sector.

Big swings in prices are not unusual during LME week, particularly when the world's top traders, producers and consumers of base metals regroup the morning after the annual dinner to discuss the state of the industry and start negotiations over next year's supply contracts.

This year, in a break from tradition, the big gyration came in nickel rather than copper. Copper is one of the most liquid and heavily traded of the LME's contracts and is considered the primary benchmark for the global nonferrous market.

UBS issued a client report designating nickel among its top commodity picks over the next two to five years due to the rapid rise in use of electric vehicles, a new source of demand.

* LME NICKEL: LME three-month nickel was up 1.8 percent to $12,692 a tonne by 0538 GMT, building on a 5 percent gain overnight. The contract is at its highest since mid-2015.

* SHFE NICKEL: The most-traded ShFE nickel contract stood 6 percent higher - its daily limit under the Shanghai exchange's trading rules - at 99,340 yuan ($14,967) a tonne, the highest in nearly 11 months.

* ShFE nickel prices have rallied 11.8 percent so far this year, compared to a 27 percent climb in LME 3-month nickel.

* ShFE nickel open interest is up 45 percent since the start of October to 374,307 contracts, highest since January.

* SHFE LEAD, ZINC: ShFE lead and zinc also posted strong advances, up 2 percent and 1.3 percent, respectively, tracking firmer domestic steel prices.

* DOLLAR UP: The U.S. dollar edged higher as investors awaited the outcome of a Federal Reserve policy meeting for clues about future tightening. The beleaguered New Zealand dollar also came roaring back to life on strong jobs data.

PRICES

Three month LME copper

Most active ShFE copper

Three month LME aluminium

Most active ShFE aluminium

Three month LME zinc

Most active ShFE zinc

Three month LME lead

Most active ShFE lead

Three month LME nickel

Most active ShFE nickel

Three month LME tin

Most active ShFE tin

ARBS

($1 6.6374 Chinese yuan)

(Reporting by James Regan; Additional reporting by Josephine Mason; Editing by Vyas Mohan and Tom Hogue)