Nickel is poised to rally a further 20 percent this year as Indonesia’s ban on exports of ore push the market toward a global shortage and unrest increases in Ukraine, a survey of analysts and traders shows.

Prices for the best-performing industrial metal since January will climb to $22,000 a metric ton by the end of 2014, from $18,270 on May 2, according to the median of 13 estimates in a survey by Bloomberg News. Benchmark futures on the London Metal Exchange have already surged 31 percent this year, following a 19 percent slump in 2013.

Indonesia, the top nickel miner, barred shipments of raw ore in January to help foster a domestic processing industry. Russia, the second-biggest producer of the refined metal, faces the prospect of tougher economic sanctions as the U.S. and European Union blame President Vladimir Putin’s government for fomenting unrest in its neighbor.

“Nickel has strong price momentum and is attracting strong speculative interest,” said Gavin Wendt, the founder and senior resource analyst at Sydney-based Mine Life Pty., who has followed the mining industry for more than two decades.

Macquarie Group Ltd. forecasts a deficit of nickel in the second half of 2014 year and large shortfalls from next next year as expectations that Indonesia may ease its ban fade, according to a report dated April 28. Goldman Sachs Group Inc. and Morgan Stanley also project a deficit in 2015. Global demand may exceed supply as early as next quarter, the largest refined nickel producer, Moscow-based OAO GMK Norilsk Nickel, said on April 7.

Pig Iron

Indonesia’s ban affects as much as 25 percent of global supply by reducing ore used in China to make nickel pig iron, an alternative to the refined metal, according to Goldman. This has resulted in ore costs rising by 90 percent this year, pushing nickel pig iron and the refined metal higher too, according to the bank.

“Positive momentum is based on solid supply-demand fundamentals and the worsening political situation in Ukraine is adding further fuel to the fire,” Wendt said.

The price range in the survey was $18,276 to $29,000.

Sumitomo Metal Mining Co., Japan’s biggest producer of nickel, said on April 21 it was among those who had underestimated the impact of Indonesia’s ban on global supplies in January.

Russia accounts for 12 percent of global nickel supply, according to Goldman. Ukraine is seeking to dislodge rebels from its eastern industrial heartland as violence that’s also spread to the Black Sea gateway of Odessa threatens to loosen its control of the regions.

Open Interest

Total market open interest, or the number of futures outstanding, for LME nickel futures contracts jumped 30 percent to a record 306,767 contracts this year. The metal remains “the largest long” among LME metals, with bets on rising prices accounting for 50 percent of open interest, the highest in a decade, according to Marex Spectron Group, a London-based broker.

The metal’s advance compares with a 2.6 percent increase in the Standard & Poor’s GSCI Spot Index of 24 raw materials this year. The MSCI All-Country World Index of equities added 1.5 percent over the same period and the Bloomberg Treasury Bond Index advanced 2.7 percent.

In the longer term, the price rally driven by the ore ban won’t be sustainable as China aggressively expands blast furnace nickel pig iron capacity in Indonesia over the next two years, Goldman said.

Vladimir Potanin, the billionaire who runs Norilsk Nickel, said on April 24 that concerns that supplies of the metal will be disrupted by sanctions are overstated. Anti-Russian sanctions aren’t so far affecting Norilsk’s business, he said.