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As of the end of Friday's daytime session, the most widely-held nickel contract for June delivery had surged by 8.2 per cent from a week earlier to RMB 144,240 per tonne (USD 21,125 per tonne). Meanwhile, the most popular contracts for June for cop per and aluminium rose by 3.9 per cent and 3.4 per cent on the week, closing at RMB 102,330 per tonne and RMB 25,520 per tonne, respectively.
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Nickel futures outperformed this week, buoyed by anticipated tighter supplies of nickel ore from Indonesia, the world's largest nickel producer. Market sentiment was bolstered by changes to the country's nickel ore pricing mechanism and disruptions to key ore processing inputs.
This week, Indonesian authorities announced that a revised mineral benchmark price (HPM) calculation formula for nickel had taken effect from April 15, which market insiders say will lift HPM levels for nickel ores and potentially increase production costs across the nickel value chain.
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In addition, a shortage of sulfur – a key input for nickel processing – had prompted some Indonesian processors to scale back output since last month, according to news reports. The disruption is linked to constrained shipments of material from the Middle East, a major sulfur-producing region. The production cuts mainly occurred at processors that use sulfuric acid-based processes to convert nickel ores into mixed hydroxide precipitate (MHP). Sulfuric acid is primarily produced through sulfur burning.
Meanwhile, changes in inventories of the three metals in the SHFE-registered and bonded warehouses varied this week. As of April 17, cop per stocks had declined by 9.8 per cent on week to 240,456 tonnes. In contrast, nickel and aluminium inventories rose by 2.7 per cent and 0.8 per cent from a week ago, reaching 67,843 tonnes and 478,354 tonnes, respectively.
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