Export Bans, Trade Sanctions Bolster Nickel ETNs

ETF Trends

Nickel exchange traded notes are shinning this year despite a broad sell-off in other industrial metals as an export ban in Indonesia and potential sanctions against Russia support nickel prices.

The iPath Dow Jones-UBS Nickel Total Return Sub-Index ETN (JJN) has gained 16.5% year-to-date while the iPath Pure Beta Nickel ETN (NINI) rose 15.6%. [A Nickel for Your Thoughts: Ukraine Conflict Boosts Nickel ETNs]

Nickel is trading around $15,820 a ton, up more than 13% so far this year.

“This is all reaction to the Indonesia export ban in January,” Andy Shaw, an analyst at Credit Suisse, said in a Financial Times report. “We forecast a price of around $14,000 for the first and second quarter of 2014. Now it is close to $16,000. The reason for this is that we and others thought there would be some loosening of the ban.”

Indonesia, the world’s leading producer of high-grade nickel ores, banned the export of unprocessed ore in January to encourage industrial development and increase the value of the country’s raw exports.

Glencore Xstrata, an Anglo-Swiss multinational commodity trading and mining company, believes that a continued ban will help balance the nickel market in 2014 and potential create a significant deficit in 2015.

Additionally, the escalating tensions on the Crimea peninsula have weighed on the outlook for Russian nickel exports. Potential sanctions against Russia could halt exports from Norilsk Nickel, Russia’s largest mining company, which accounts for 17% of world output.

“Comments from the rest of the world leaders just add to continued concerns about potential trade sanctions against Russia and supply constraints for nickel,” Mike Dragosits, a senior commodity strategist at TD Securities in Toronto, said in a Bloomberg article.

iPath Dow Jones-UBS Nickel Total Return Sub-Index ETN

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For more information on nickel, visit our nickel category.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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