Nickel prices in China hit a record high after trading of the metal was suspended in London and oil benchmarks climbed in response to the US ban on Russian oil and gas imports.
Nickel prices rose 17 per cent to hit a record of Rmb267,700 (about $42,400) a tonne on Wednesday, touching their ceiling for daily gains. A bad bet placed by a Chinese metals tycoon had sent prices surging above a record $100,000 a tonne on Tuesday, one of the most extreme price movements in the London Metal Exchange’s 145-year-old history.
Prices of the metal had already been rising following Putin’s invasion of Ukraine. Russia supplies nearly 13 per cent of the total global nickel mining capacity in 2021, according to consultancy Rystad Energy.
The jump in nickel futures delivered a blow to Chinese companies that rely on the metal as a key input, with battery maker Huayou Cobalt and auto parts producer Hengli Industrial both falling the maximum 10 per cent in Shanghai and Shenzhen, respectively.
Elsewhere in commodities markets, Brent crude, the international benchmark, rose as much as 2.9 per cent to $131.64 a barrel, while US marker West Texas Intermediate jumped as much as 2.4 per cent to $126.68.
Both contracts closed Tuesday’s session up more than 3 per cent after President Joe Biden banned imports of Russian oil and gas into the US. The move was matched by the UK’s phaseout of Russian oil imports while the EU decided to cut Russian gas imports by two-thirds within a year.
“Russian oil will no longer be acceptable at US ports and the American people will deal another powerful blow to Putin’s war machine,” Biden said.
The ban on US and UK imports marks the latest escalation in sanctions on Russia over its invasion. The S&P 500 closed at its lowest level since June 2021 on Tuesday as commodity prices surged to record highs on fears of large-scale, sustained disruption.
European natural gas contracts have risen by more than 200 per cent over concerns that Russian supply could be cut off. The disruptions to wheat exports from Ukraine and Russia have sent wheat futures almost two-thirds higher.
Paul McTaggart, head of research for Australia and New Zealand at Citi, said commodity markets had “fundamentally changed” as the bank raised its 2022 forecast for Brent by 24 per cent to $89 to reflect expectations of sustained upward pressure. He added that “longer-term, the shift in Nato-Russian relations may have wide-ranging impacts, including on relations with China”.
In equities, Asian markets were largely lower, with Hong Kong’s Hang Seng index down 2.2 per cent and China’s CSI 300 off 1.3 per cent.
Futures tipped European stocks to open higher, with the Euro Stoxx 50 set to gain 1.5 per cent and the FTSE 100 expected to rise 1.4 per cent. The S&P 500 was expected to gain 0.4 per cent after closing down 0.7 per cent lower on Monday.
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