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Nickel prices soar alongside demand and shortages

  • "The nickel market has swung into a large deficit ... despite large growth in Indonesian nickel supply of over 300,000 tonnes this year"
Published September 10, 2021
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LONDON: Nickel prices jumped on Friday to their highest in more than seven years due to shortages created by a sharp rise in demand from stainless steel mills and electric vehicle battery makers and sliding stocks.

Benchmark nickel on the London Metal Exchange was up 0.7% at $20,335 a tonne at 1054 GMT from an earlier $20,705 a tonne, the highest since May 2014. The contract is up nearly 30% since hitting 2021 lows in March.

Macquarie analyst Jim Lennon expects nickel consumption to grow 17% this year to 2.8 million tonnes.

"Stainless steel production, the main use of nickel, is set to grow by 16% this year, adding 250,000 tonnes to nickel demand. Nickel used in batteries is set to grow by 100,000 tonnes this year to around 290,000 tonnes," Lennon said.

"The nickel market has swung into a large deficit ... despite large growth in Indonesian nickel supply of over 300,000 tonnes this year."

Nickel hits highest since 2014 as stockpiles dwindle

China: Nickel prices leaped to a record high on the Shanghai Futures Exchange (ShFE).

Stainless steel mills, mostly in China, account for roughly two-thirds of global nickel consumption.

Inventories: Stocks are being drawn to fill the supply gap.

Nickel stocks in warehouses monitored by the ShFE at 8,608 tonnes have more than halved since the end of last year. They fell to a record low of 4,455 tonnes in August.

In LME registered warehouses, stocks at 179,394 tonnes have tumbled more than 30% since mid-April.

Spreads: Worries about supplies have created a premium for the cash over the three-month nickel contract.

Aluminium: Worries about production curbs in China to control emissions and fears of disruption in major bauxite producer Guinea due to political turmoil propelled aluminium prices to $2,903.50, the highest in 13 years.

It was last up 2% at $2,896 a tonne.

Other Metals: Positive sentiment and a lower dollar index supported industrial metals overall.

Copper was up 1.5% at $9,528 a tonne, zinc gained 0.7% to $3,097, lead added 0.8% to $2,317 and tin climbed 2.4% to $34,105.

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