Jim Lennon: Nickel in Batteries to Grow Massively Beyond 2020

Many market participants believe nickel demand from the battery sector will grow significantly in the next few years, due not only to an increase in electric car sales but also because the market is moving towards high nickel cathode chemistries.

To get more insight on what is happening in the nickel space, the Investing News Network sat down with expert Jim Lennon, managing director of Red Door Research, at this year’s Cathodes conference.

In 2018, the nickel supply and demand balance was as Lennon had expected at the end of 2017.

“Demand was very strong, in particular in the first six months of the year, and supply has been weak,” Lennon said, adding that the market has been in a large deficit.

“What has surprised me is that prices have fallen since the middle of the year quite sharply, around 15 to 20 percent, and that seems to resemble global economic fears,” he said.

Speaking about demand from the battery sector, Lennon is bullish that it will increase in the next few years.

“At the moment demand from the battery sector represents a 4 to 5 percent of overall demand (…), however [this is growing] at a probably 30 percent compound average rate growth,” Lennon said, explaining that it will be a challenge to meet that increasing demand.

Looking over to supply, Lennon said that what he has seen this year is output from traditional producers was either static or declining because of under investment in the past 5 to 7 years.

“Most of the supply growth is coming from Indonesia, from Chinese investors in Indonesia, in the form of nickel pig iron, which is not suitable for batteries,” he said.

Lennon also talked more about nickel prices, and whether the market will see a two different prices for the base metal based on its use.

Listen to the interview above for more insight from Lennon, who also talks about what factors could derail the nickel story. You can also click here to listen to our full Cathodes interviews playlist on YouTube.

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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 contributed article. 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.