Electric vehicle story fuels nickel’s jump to 2-year high

LONDON — Nickel prices rocketed nearly six percent on Wednesday to two-year highs on growing expectations of strong demand from manufacturers of rechargeable lithium-ion batteries used to power electric vehicles.

Benchmark nickel on the London Metal Exchange (LME) ended up four percent at $12,785 a ton from an earlier $13,030, its highest since June 2015. Prices of the metal used mostly to make stainless steel are up around 30% so far this year.

“The subject of electric cars is right now not just playing into cobalt and lithium, but also more into nickel, which is considered a laggard among the metals most likely to benefit,” said Commerzbank analyst Eugen Weinberg.

“Market focus is on the future, but supplies of nickel at the moment are good and inventories are high. The current nickel price rise is probably premature.”

Nickel futures on Shanghai Futures Exchange hit their daily limit, which under the bourse’s trading rules is 99,340 yuan a ton, the highest in nearly 11 months.

UBS recently issued a report designating nickel among its top commodity picks over the next two to five years due to the rapid rise in use of electric vehicles (EV). It said that battery composition was shifting faster to higher nickel-intensive use than previously modeled.

Wood Mackenzie analysts estimate nickel demand in EV batteries will rise to about 220,000 tons in 2025 from about 40,000 tons last year.

“When all other battery applications are included, such as consumer electronics and energy storage — another field of potentially substantial future growth — this figure increases to 275,000 tons in 2025 — approximately 12% of global supply in 2025.”

The flow of Indonesian nickel ore to China resumed in July following a ban on all exports of unprocessed minerals, including nickel, at the start of 2014.

The Philippines’ environment secretary last week said he was hopeful a ban on open-pit mining would be lifted before yearend, enabling the world’s top nickel exporter to lift shipments.

Stocks of nickel in LME warehouses at around 381,000 tons account for nearly 20% of global consumption. However, canceled warrants — metal earmarked for delivery — at 37% have fueled worries about a tight market.

LME zinc closed up 0.40% at $3,277 a ton from an earlier $3,326 a ton, its highest since August 2007. Prices have been boosted by expectations of deficits.

Elsewhere, copper was up 1.30% at $6,930, aluminum rose 1.20% to $ 2,185, lead gained 2.80% to $ 2,482 and tin added 0.10% to $19,400 a ton. —