Nickel Prices Soar in Q3 on Supply Concerns

Following rumors of a ban and electric vehicle (EV) industry growth expectations, nickel posted its best quarterly performance since 2010 in Q3 — rising 34 percent during the three month period. 

The price of nickel has seen explosive growth since July, rising as high as US$16,080 per tonne on the London Metal Exchange on August 16. 

When news broke concerning Indonesia’s upcoming nickel ore export ban, prices surged to US$15,490 from US$14,735 in a single day. As of Tuesday (October 1), nickel was trading at US$17,375.

Speaking about why nickel has performed better than other metals this quarter, Ryan McKay, commodity strategist at TD Securities, told Bloomberg, “The Indonesian ore ban, along with speculators investing on momentum being buyers rather than being sellers, are the two main reasons.”

Indonesia’s export ban, planned to take effect in January 2020, will remove as much as 350,000 tonnes of nickel from global supply, according to experts at the International Nickel Study Group.

Nickel has also done well due to growing interest in EVs, which require the base metal in their batteries. 

“The other thing (affecting nickel prices) I would say is the EV hype. I mean, for the longer-term trend, EVs are still there,” Colin Hamilton, managing director of commodities research at BMO Capital Markets, told the Investing News Network previously. “For the battery raw materials, a lot of the hype has disappeared from the market at the present time. For nickel stainless steel demand, it still remains relatively strong.” 

Before the summer ended, experts expected nickel would ease in price by the end of the year. But following its surge in September, many analysts are now forecasting a more steady price performance, while some believe nickel will only continue to rise into Q4.

In their September report, FocusEconomics analysts said they see nickel prices averaging US$14,052 in Q4 2019 and US$13,966 in Q4 2020.   

“Nickel prices will fall from current highs amid the ongoing US-China trade conflict and increased concerns over the global economic outlook,” reads a part of the report. “Easing supply deficits should cushion prices, however. Over the longer-term, higher EV battery output bodes well for demand and should help lift prices to some extent.”

Analysts at Raymond James also increased their price expectations in their latest report, calling for US$5.79 per pound to US$6.42 in 2019, and from US$6.50 to US$7 in 2020.

“We have raised our nickel price forecasts for 2019 (up 11 percent) and 2020 (up 8 percent) to reflect the tight supply environment which we expect to persist for some time,” they said.

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Securities Disclosure: I, Sasha Dhesi, 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.