But it’s still too soon to say exactly what effect the virus will have on the base metal, said Alex Laugharne of CRU Group.
Base metals have been suffering since the start of the year, and nickel prices have been no exception, declining almost 10 percent since January on the back of coronavirus outbreak fears.
At this year’s Prospectors & Developers Association of Canada (PDAC) convention, the Investing News Network caught up with Alex Laugharne, principal consultant at CRU Group, to get more insight on what’s ahead for the nickel outlook.
“(COVID-19) is such a rapidly changing story that we are yet to fully see the impact throughout the value chain and therefore understand how large the impact might be on demand,” he said.
Laugharne said that once CRU Group revises its forecasts, nickel’s outlook will be different than what was previously expected at the end of 2019, but it is hard to say to what extent.
“The focus for nickel is battery metals (even though) 70 percent is used in stainless steel, but it is really hard to say if it’s going to be hit more than other materials,” he added.
The expert also shared his thoughts on nickel’s price spike in the third quarter of last year.
“(Nickel) came down quite quickly because (the rally) was not supported by fundamentals,” he said. “Nickel demand throughout 2019 had generally underperformed due to weak macroeconomic health, with the trade war between US and China playing a big role in that.”
Laugharne talked about the Indonesia ban as well and why a restriction such as the one imposed by the Asian country works much better in nickel than in other markets.
Watch the video above to learn more about Laugharne’s thoughts on what the future holds for nickel. You can also click here for our full PDAC playlist.
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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.