From January 2019 to today, nickel prices have reached the highest levels since 2014. The metal has risen by about 70% since the beginning of the year, reaching over 18,000 dollars per ton. In the context of a waning metals market, with copper falling by 5% from January, aluminum performing similarly and tin that marks -20%, the growth of nickel seems unstoppable by comparison.
Growth was affected by the announcement of Indonesia, the first supplier in the world, which confirmed its decision to anticipate to December its ban on raw minerals exports that was initially planned for 2022. The Government of Jakarta aims to retain added value on the domestic market and become a battery hub.
If the stainless steel market will indeed be the most affected, considering that it accounts for about 70% of consumption and is currently the first source of nickel demand, we must take into account that the increase in raw material will also have a significant impact on the electric batteries sector. The expectation of an increase in electric cars consumption assumes, in the medium-long term, a rise in the demand for batteries with greater autonomy, which contain a larger quantity of nickel and of a purer quality than the nickel used in the steel industry.
Today batteries represent only 4% of nickel demand (which overall amounts to about 2.4 million tons), but this share could grow rapidly: according to Roskill it will reach 10% in 2022 and 20% by 2030.
According to Lme statistics, there is only one player who, on its own, controls between 50% and 79% of the stock market stocks. An article published last August 31 states that “Hedge funds have begun to buy back short positions (for selling), when it became clear that China actually kept producing stainless steel at a rate well above expectations: in the first semester its production grew by 11% to 14 million tons. In particular, the 300 Series products, which contain high percentages of nickel (8-8.5% compared with 1-2.5% of the 200 Series, while the 400 Series does not contain any), have allegedly increased. In July, word had spread that the Chinese Tsingshan – today one of the largest producers of stainless steel – had begun to buy large quantities of nickel at the Lme, after having noticed a shortage of supplies due to having underestimated its own needs“(source Il Sole 24 hours).
Stocks in the warehouses of the London metal exchange have now reduced by half compared to a couple of years ago and have reached a 7-year minimum at the beginning of August (142,200 tons).