(Bloomberg) — A rally in base metals is gathering pace, with concerns about supply combining with strong demand to propel prices to multiyear highs.
Aluminum notched a fresh 13-year high and nickel stormed to the highest since 2014 in London. Both metals are benefiting from a robust long-term outlook due to their roles in the clean-energy transition, as well as China’s crackdown on emissions in its energy-intensive industries.
“Nickel has been hovering around, waiting to find a way to break through $20,110,” said Zhou Weigang, analyst with Jinrui Futures Co. “China’s crackdown on energy-intensive industries is spreading from aluminum to stainless steel and nickel pig iron.”
The surge in commodities, as well as soaring shipping costs and an uneven economic recovery, have been pressuring global consumer prices. Data on Thursday showed China’s factory-gate inflation accelerated to a 13-year high, while figures due next week are set to show the U.S. CPI rose by more than 5%.
Aluminum climbed as much as 1.9% to $2,848 a ton on the London Metal Exchange, the highest since 2008, before trading at $2,844. As well as production constraints in China, the metal has been given an additional boost from concerns a coup in Guinea may tighten bauxite supply. Nickel jumped 2.8% to $20,255 a ton, the highest since 2014.
Read more: China Will Need to Reassess Its Efforts to Cap Commodity Prices
There are already signs that the commodities boom is re-shaping consumption patterns. Top air-conditioner maker, Japan’s Daikin Industries Ltd., plans to replace half of the copper in its units with aluminum by 2025. And a Chinese state researcher is working with top home-appliances groups on using more aluminum.
Nickel, a key component in electric-vehicle batteries, is expected to be among the raw materials that stand to gain most from a global transition to low-carbon energy sources. Tesla Inc. in July struck a nickel-supply deal with BHP Group, as the EV maker seeks to protect itself from a future supply crunch.
In the meantime, surging Chinese production of stainless steel is fueling nickel demand. Stainless futures rose as much as 2.7%, while steel rebar climbed more than 4%.
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