As Nickel Price Hits Two Year High, One Aussie Miner Burns The Shorts

What happened to the nickel price?

Nickel advanced as much as 2.9% to $12,380 per metric ton on the London Metal Exchange — its highest since June 2015. It joins copper at new multi-year highs and is further sign that the underlying global economy could be on the rise.

Burning the shorts

Australian nickel miner Western Area Resources [ASX:WSA] was one of the most shorted shares on the ASX. But investors betting on the WSA share price falling are starting to get nervous. Short interest has reduced from 20% of the total outstanding stock to 17% in the last 4 weeks.

That’s still high though and any further nickel price rises could see a scramble for the exits as shorters have to buy the share back at higher and higher prices. Good news for any WSA current shareholders

What now for commodities?

The industrial commodities copper, nickel, zinc, aluminium and iron ore are all rising quite sharply. Predictably it’s all based on factory activity in China.

The Chinese manufacturing PMI rose by 0.5 points to 51.6 in August — the second highest reading of activity this year and the third consecutive month it has expanded after a period of softness earlier in the year.

A reading of 50 reflects the breakeven measure between expanding and contracting activity.

If this continues it’s good news for Western Areas Resources and all Australian miners. Click here to read a free report on the top 10 Australian mining stocks.

Ryan Dinse,
Money Morning

Ryan Dinse is an Editor at Money Morning.

He has worked in finance and investing for the past two decades as a financial planner, senior credit analyst, equity trader and fintech entrepreneur.

With an academic background in economics, he believes that the key to making good investments is investing appropriately at each stage of the economic cycle.

Different market conditions provide different opportunities. Ryan combines fundamental, technical and economic analysis with the goal of making sure you are in the right investments at the right time.

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