LONDON (Reuters) – Nickel prices soared to seven-year highs on Friday as supply fears resurfaced after an Indonesian government official said the country was considering taxes on exports from the ingredient in stainless steel.

Traders said post-New York profit-taking weighed on nickel on the London Metal Exchange (LME), which was down 0.2% to $ 19,360 per tonne at 1600 GMT . Prices for the metal used in electric vehicle batteries hit $ 20,705 per tonne last week, their highest level since May 2014.

“Stocks are low, demand is higher than expected and supplies have not kept up. The idea of ​​Indonesia imposing export taxes only adds to the mix,” said one trader in nickel.

INDONESIA: Investment Minister Bahlil Lahadalia said Indonesia is exploring the possibility of levying an export tax on nickel products containing less than 70% nickel to boost industry expansion national transformation of the country.

STOCKS: Nickel stocks in LME-registered warehouses have fallen 35% since April to 171,714 tonnes.

Canceled warrants – metal for delivery – at 35% and a company with large amounts of warrants are also fueling concerns about a tight LME market.

That pushed the premium for liquid metal on the three-month contract to $ 32 a tonne, from $ 15 at Thursday’s close.

ALUMINUM: Prices for metal used in transportation and packaging industries trade near 13-year highs on expectations that accelerating production cuts in China to control emissions will create significant shortages this year.

“China needs to balance the environment with the economy. If the situation arises, I would say China will always look at the economy,” said Carsten Menke, analyst at Julius Baer.

The high prices were also bolstered by concerns over the disruption in Guinea, which has large reserves of bauxite used to make alumina as a raw material for aluminum.

Three-month aluminum rose 0.2% to $ 2,885.5.

OTHER METALS: Copper fell 0.5% to $ 9,321 per tonne, zinc slipped 0.1% to $ 3,078, lead slipped 1.2% to $ 2,180 and tin rose 0.3% to $ 34,140.

Read also:

Indonesia wants to develop a complete supply chain for nickel, from extracting ore from its rich nickel reserve to producing batteries and assembling electric vehicles (EVs) at home.

US data expected later today would provide more clues as to the pace of tightening stimulus measures in the world’s largest economy, which could affect liquidity in financial markets, the global economic recovery and the dollar – which can all have an impact on base metals.