Nickel ETN Surges as Russia Sanctions Exacerbate Already Low Supplies

A nickel-related exchange traded fund is strengthening on Friday, with nickel prices breaking above $30,000 for the first time since 2008, as the intensifying conflict between Russia and Ukraine puts the industrial metal’s supply outlook at risk.

The iPath Series B Bloomberg Nickel Subindex Total Return ETN (NYSEArca: JJN) jumped 6.5% on Friday. Meanwhile, nickel prices have surged to as high as $30,295 per metric ton for the first time since 2008, and the metal has gained 19% this week for its biggest weekly increase since 2009.

“There are more signs that geopolitical risks have turned into supply disruptions,” investment bank ING said in a report, after the world’s three largest container shipping companies suspended shipments to Russia.

ING warned that there are indications that metal flows in Russia are increasingly limited due to transport problems and Western sanctions.

Russia is a major global nickel supplier, with Norilsk making up for about 10% of refined nickel output globally, reports.

The Friday surge in nickel prices may have been attributed to a short squeeze as clients with short positions have been pushed out of the trades, reports. For instance, industrial hedgers have been saddled with large intraday margin calls after prices surged this week on supply disruptions from Russia, and they are being forced to close out positions in an increasingly illiquid market.

“Such activity is most likely being driven by memories from the last time sanctions on Russia hit the base metals market,” Commodity Insights’ senior analyst Jason Sappor said in a February 28 report, according to S&P Global. In 2018, sanctions imposed on Russian aluminum company UC RUSAL prompted the LME to stop its delivery and use of Rusal-branded metal, causing the price of aluminum to spike.

Meanwhile, global supplies are also dwindling, with nickel stockpiles at their lowest levels since 2019. Supplies are especially tight in Europe, where the surging premiums for cash metal had pushed some traders to switch to break-bulk vessels to bring metals all the way from Malaysia’s Port Klang warehouses.

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