Covid Vaccine: High spirits do not spill over to metals

Positive news about the efficacy of a vaccine under development against Covid-19 led to euphoria in the financial markets yesterday. Stock markets around the globe ignited the rockets. In the meantime, oil prices jumped up by more than 10%. In contrast, the prices of industrial metals even declined. Measured by the LME Industrial Metals Index (LMEX), they lost 0.2%. Nevertheless, the LMEX remains close to its highest level since mid-2018. The metals had risen noticeably in the days before and had virtually anticipated the positive news. The biggest winner yesterday was nickel with a gain of at times almost 4% to just under USD 16,000 per tonne. In addition to the generally exuberant mood on the markets, we believe that nickel benefited from news from China.

The China Metallurgical Industry Planning and Research Institute has called for strategic reserves of raw materials for steel production to be built up. Manganese ore, chrome ore, nickel ore and coking coal were explicitly mentioned. Already last week the state research institute Antaike had published an assessment according to which this year's high supply surplus on the global nickel market is expected to be significantly reduced next year. Antaike used the figures from the International Nickel Study Group from October and attributes the reduction in the surplus to strong nickel demand. At the same time, Antaike expects Indonesia to overtake China as the largest nickel pig iron producer (NPI) this year due to the export ban on untreated ore. Next year Indonesia is expected to increase its NPI production by around 25% to 685 thousand tons. The majority of this will probably be shipped to China.

Source: Commerzbank Research, Photo: Fotolia