We are now seeing the first repercussions of the fact that the disputes between China and the Philippines extend beyond the South China Sea — the nickel price is on the rise following nickel mine shutdowns ordered by the Philippine government.
Last night, nickel edged up to a one-year peak of $US4.81 a pound. While last night’s price is a far cry from the heady days when nickel was above $US10 a pound, it still represents a rise of almost 15 per cent from the $US4.20-a-pound level where nickel traded just a month ago.
While the outlook for all the base metals is improving, the shut down of key nickel mines in the Philippines has given a real boost to the nickel market at the expense of China.
The fact that the Philippine government’s shut down orders came a few days before the International Court of Justice ruled in favour of the Philippines over China in their South China Sea dispute is not lost on the nickel market, although, naturally, everyone may deny a connection.
Nevertheless, this is the first of many trade issues that will arise in the South China Sea, which, we should not forget, is the main route used by Japan to gain supplies.
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