Nickel price is soar­ing...

Zambian Business Times - - FRONT PAGE -

The nickel price is on a tear sup­ported by en­vi­ron­men­tal pro­duc­tion cuts across top pro­ducer China, plung­ing in­ven­to­ries and strong steel prices.

The most-traded nickel con­tract on the Shang­hai Fu­tures Ex­change is set for a weekly gain of 5.6%, while open-in­ter­est – a mea­sure of mar­ket par­tic­i­pa­tion – sits near record lev­els. On the London Metal Ex­change, the price jumped to $15,340 a tonne on Friday, its high­est close since Jan­uary 2015.

The im­me­di­ate driver for the surge in the price – up 75% over the past 12 months – is a sharp fall in stocks of the metal, mainly used to make stain­less steel. Global stain­less steel out­put grew 6% last year.

Nickel stocks in ShFE ware­houses have dropped 39% over the past four months while in­ven­to­ries con­trolled by the LME have de­clined for 18 con­sec­u­tive days. To­tal ex­change stocks have dropped to be­low 300,000 tonnes, from more than 450,000 tonnes a year ago.

To­tal pri­mary pro­duc­tion of nickel is in the re­gion of 2m tonnes an­nu­ally and stag­nated through the pe­riod of low prices. Ore sup­ply is likely to in­crease sharply this year af­ter In­done­sia, top sup­plier to China's nickel pig iron pro­duc­ers, lifted its ex­port ban.

Bullish­ness about boom­ing de­mand from the elec­tric ve­hi­cle bat­tery mar­ket may also be a fac­tor be­hind the rapid draw­down of stocks.

Nickel, man­ganese and cobalt are the cru­cial el­e­ments in bat­ter­ies favoured by most of the world’s au­tomak­ers. Ex­change stocks of nickel are typ­i­cally higher grade and suit­able for bat­tery pro­duc­tion, whereas nickel used in steel­mak­ing is not.

It's early days though. To­day only 5% of nickel pro­duc­tion goes into bat­ter­ies and 1% in EV power plants.

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