LONDON, Jan 4 (Reuters) - Nickel prices surged to two-week highs on Monday as concern about supplies surfaced after an earthquake in Indonesia, while base metals overall were boosted by a weaker dollar and robust manufacturing activity in China and Europe.
Benchmark nickel on the London Metal Exchange traded up 4.8% at $17,403 a tonne in official rings from an earlier $17,485, the highest since Dec. 21.
“Earthquakes in Indonesia triggered nickel buying, but it’s a knee-jerk reaction and I’m not sure these levels can be sustained as production hasn’t really been affected,” a nickel trader said.
He added that a break of the 21-day moving average around $16,930 had provided momentum for higher levels.
INDONESIA: Earthquakes shook the island of Sulawesi, causing minor damage to buildings in Indonesia Morowali Industrial Park, where China’s Tsingshan Holding Group produces nickel pig iron, but operations were generally unaffected and production continues, a spokesman for the plant said.
MANUFACTURING: Manufacturers in the euro zone ended 2020 on a high, with activity in the sector increasing at its fastest pace since mid-2018, a survey showed.
Activity in China’s factory sector rose in December as the world’s top consumer of industrial metals sustained its recovery to pre-pandemic levels, a survey showed.
DOLLAR: A weaker U.S. currency makes dollar-denominated industrial metals cheaper for holders of other currencies, which could boost demand and prices.
“The Georgia runoff will be a major event for markets. It could have major implications for the dollar,” said ING analyst Wenyu Yao.
Control of the U.S. Senate – and with it, the likely fate of President-elect Joe Biden’s legislative agenda – will be on the ballot on Tuesday when voters in Georgia decide twin runoff elections.
COPPER: Prices of the metal widely used by investors as a gauge of economic health rose to $7,946 towards the eight-year highs of $8,028 hit on Dec. 18.
It was last up 2.1% at $7,931 a tonne.
OTHER METALS: Aluminium was up 1.8% at $2,016, zinc gained 1.7% to $2,797.50, lead rose 2.4% to $2,042 and tin climbed 2% to $20,735 a tonne.
Reporting by Pratima Desai; additional reporting by Tom Daly; editing by Emelia Sithole-Matarise