* LME/ShFE arb: (Adds official midday prices, details)By Maytaal AngelLONDON, April 19 (Reuters) - Nickel soared 9 percent to athree-year high on Thursday, extending the previous session'sblistering rally on fears the metal could become ensnared inU.S. sanctions on Russian firms, although analysts say gainscould be short-lived.The United States last week slapped sanctions on majorRussian aluminium producer Rusal and traders fear themove may be broadened to hit Russia's Nornickel , theworld's second largest producer of the metal.
Nornickel is linked with both Rusal and sanctioned Russianoligarch Oleg Deripaska.Three-month nickel on the London Metal Exchange rallied 9.3 percent to $16,690 a tonne overnight, the highestsince December 2014. The metal was last bid up 3.3 percent at$15,780 in official midday rings, adding to Wednesday's7.5-percent spike.
"The U.S. can't afford to (impose sanctions on) Nornickelbecause they are so heavily reliant on (its) palladium. Thequestion is how the situation will evolve if tensions tightenbetween Russia and the U.S., that's what the market is currentlyplaying," said Julius Baer analyst Carsten Menke.But he added: "If any commodity moves more than 10 percentin two days, its either a severe disruption to supplies, whichwe don't have in this case, or its speculators. In case ofnickel it's the latter, the rally is absolutely overdone."Russian news agencies reported on Wednesday the U.S.administration had informed the Russian embassy in Washingtonthat it had no immediate plans to impose new sanctions. NICKEL DEFICIT: The global nickel market deficit narrowed to2,500 tonnes in February from a revised deficit of 15,800 tonnesin the previous month. ALUMINIUM PRICE: Aluminium hit its highest level inalmost seven years at $2,718 a tonne and later traded up 1.9percent in rings at $2,585. The light metal has risen by nearlya third since the April 6 sanctions imposed on Rusal, theworld's No. 2 aluminium producer.
NATIONALISATION: A temporary nationalisation of Rusal is oneof the options for helping the company, a Kremlin spokesman saidon Thursday. RUSAL STOCKPILING: Rusal is stockpiling large quantities ofaluminium at one of its plants in Siberia because U.S. sanctions have prevented it from selling the metal to customers, fivesources close to the company said. NOVELIS: Novelis Corp, the world's biggest producer ofrolled aluminium products, said it would no longer purchasemetal produced by Rusal. SHANGHAI NICKEL TRADING FEES: China's Shanghai FuturesExchange will adjust its intraday transaction fee for Julynickel futures after they rose 4.3 percent on Thursday. OTHER METALS: Copper traded down 0.6 percent inrings at $6,980 a tonne, zinc was last bid down 0.7percent at $3,243, lead traded down 1.1 percent at$2,350 while tin traded up 0.4 percent at $21,550.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^Top Base and Precious Metals Analysis - GFMS ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Additional reporting by Manolo Serapio Jr.Editing by Edmund Blair and Adrian Croft)