Nickel Trends 2020: Prices Surge on EV Demand Expectations

What nickel trends drove prices in 2020? We run through top supply, demand and price catalysts in this overview of the space.

Click here to read the previous nickel trends article.

Similar to most base metals, nickel has had an interesting 2020 ― a year where the coronavirus pandemic overshadowed forecasts across the board. 

Despite the impact of COVID-19, nickel prices were able to rebound, with many investors speculating on the potential of the metal in electric vehicle (EV) batteries.

Here, the Investing News Network looks back at the nickel trends for 2020, supply and demand dynamics, how the metal performed and what analysts said quarter by quarter.

Nickel trends Q1: COVID-19 takes over

As the year kicked off, Indonesia’s already expected ban on nickel ore exports took effect two years ahead of schedule, with many predicting the measure could drive prices higher.

But instead nickel prices touched their lowest level in March, reaching U$11,055 per tonne when the COVID-19 pandemic hit commodities across the board.

2020 nickel price chart

2020 nickel price performance. Chart via the London Metal Exchange.

Mining and refining facilities for nickel were disrupted at a global scale, from the Philippines to Canada, as a result of coronavirus containment measures.

“We expect primary refined nickel supply to decline by a little more than 1 percent year-on-year in 2020 because of the disruptions,” Jack Anderson of Roskill said back in Q1. “However, Indonesian nickel pig iron production has soared through early 2020, which has helped to make up for falls in refined nickel supply elsewhere.”

For Anderson, nickel demand was more severely impacted as the virus eventually forced governments across the world to impose measures aimed at slowing the spread of the disease.

“Those measures, however, also resulted in a sharp slowdown in economic activity, which is expected to lead to a sharp deceleration in primary nickel demand,” he said at the time.

Nickel prices started the quarter trading at US$14,070 and ended the three month period at US$11,235.

Nickel trends Q2: Recovery begins

During Q2, nickel was able to rebound, making its way back above US$12,000 by the end of the period on the back of China’s recovery. Nickel’s price performance was a surprise to the upside in H1, according to Andrew Mitchell, Wood Mackenzie’s research director.

“This is not supported by fundamentals, (it’s) more sentiment and perception,” he said back in Q2.

CRU Group’s Nikhil Shah told the Investing News Network (INN) at the time that the surprise of the first half of the year was how quickly the rebound in prices happened given nickel’s fundamentals.

“I think that is a concern, given that fundamentally we look at the market being in surplus this year,” he said. “There’s potential for nickel prices to correct from current levels in the second half of the year.”

For Mitchell, supply was less impacted by the pandemic, as in most countries mining was deemed an important industry to maintain — that said, production was lost in Canada, the Philippines, New Caledonia and Madagascar, and to a lesser extent South Africa and Australia.

“The incredible growth in production in Indonesia, combined with the demand destruction of COVID-19, has moved our forecast from one of deficits and higher prices as of the end of 2019 to one of surplus and stagnating/lower prices,” Mitchell said back in Q2.

Q2 saw nickel demand picking up, especially in China. While the country was the first to be affected by the COVID-19 pandemic, it was also the first to begin to lift lockdown measures, Anderson said.

“Elsewhere, demand is expected to start recovering as lockdown measures begin to be lifted,” he added. “This should result in a gradual improvement in demand, albeit from a low base.”

When looking at nickel’s fundamentals, Mitchell told INN that the coronavirus has had a major impact on demand globally, and despite China’s strong return, the rest of the world will take a few years to get back to 2019 levels. “Stainless and superalloy being particularly affected, but also the EV sector,” he said.

Nickel prices started the quarter trading at US$11,220 to end the three month period at US$12,790.

Nickel trends Q3: Elon Musk calls for more nickel mining

During the summer, Tesla (NASDAQ:TSLA) CEO Elon Musk called for more mining of nickel, as it is an essential component of EV batteries.

“Tesla will give you a giant contract for a long period of time if you mine nickel efficiently and in an environmentally sensitive way,” Musk said.

Prices rallied after the CEO’s comments, sending nickel to its quarterly high of US$15,660.

At Tesla’s Battery Day, a dedicated event on batteries held in late September, Musk said that the automaker is looking to process nickel in a more efficient way, eliminating steps and addressing the waste of water. He also reiterated his request for more nickel mining, and said the company is developing cathodes that will contain higher nickel and no cobalt.

“The move to high-nickel cathodes has been widely accepted, and Tesla confirmed that it was in the same boat,” Sean Mulshaw of Wood Mackenzie told INN after the event. “(But) more nickel comes at the expense of cobalt, and this means lower stability of the cathode.”

During Battery Day, Musk also said the California-based automaker has found a simplified way to process nickel that suggests it will eliminate the Class 1 nickel dissolution process.

Currently, demand for nickel sulfate is based on present-day commercialized nickel raw material to cathode production routes, with Tesla now announcing its intention to utilize 100 percent nickel powder direct to cathode, Anderson explained.

“However, the difficulties of such with regards to process refinement, yield optimization and expanding to commercial scale should not be understated,” he added. “New developments in technology from first inception through to commercialization can span eight to 10 years; an industry track record indicating a minimum of five years longer is likelier than that of Tesla’s proposed three year plan.”

Should Tesla succeed in its battery cathode manufacturing ambitions, Roskill believes there is a greater supply shortage risk for suitable metal powder than there is for nickel sulfate.

“In addition to the availability of specific nickel products, there are growing concerns surrounding sustainability of the nickel supply chain. This is particularly important for the EV supply chain, where consumers are inherently aware of the environmental footprint of their purchase,” Anderson said.

Nickel prices started the quarter trading at US$12,555 to end the three month period at US$14,385.

Nickel trends Q4: Prices continue to trend upwards

Nickel continued its climb during the fourth quarter, hitting its highest level of the year so far on November 30 at US$16,343.

Prices were driven by higher demand from the stainless steel sector, in particular in China and Indonesia.

“Few anticipated the remarkable recovery in Chinese and Indonesian stainless steel production, particularly of the high-nickel 300-series grades,” Macquarie analyst Jim Lennon said.

“Preliminary soundings for October suggest production will remain solid at near record high levels, with Indonesian production rising to new record highs.”

Global demand for nickel is expected at 2.52 million tonnes in 2021 from 2.32 million tonnes this year, according to the International Nickel Study Group.

On the supply side, scheduled expansions of output capacity in Indonesia have been delayed until next year, which has increased concerns over supply tightness and pushed prices further upwards, according to a recent FocusEconomics report.

“Moreover, global nickel output is set to increase notably next year as Indonesian production ramps up, leading to supply surpluses,” analysts at the firm said. “A prolonged global health crisis, which could weigh on the pace of the economic recovery, poses an additional downside risk.”

Nickel prices started the quarter trading at US$14,430, and on December 1 they were at US$16,102.

Don’t forget to follow us @INN_Resource for real-time news updates.

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.

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Catch up and get informed with this week's content highlights from Charlotte McLeod, our editorial director.

Top Stories This Week: Powell Gets Fed Nomination, Using Gold in a Market Correction youtu.be

We're back after a break last week with quite a bit to cover in the gold space.

After running up past the US$1,860 per ounce mark midway through November, the yellow metal has taken a tumble. At the time of this writing on Friday (November 26) afternoon, it was sitting just under US$1,790.

Gold's losses this week have been attributed to elements like a stronger US dollar and better Treasury yields, although Jerome Powell's US Federal Reserve chair renomination has pulled other factors into play — some market watchers believe he may move to taper and raise interest rates faster than anticipated.


If the Fed follows its previously laid out timeline for tapering, it will wrap up in mid-2022; the central bank has said it won't raise rates until after that. It has also emphasized that its roadmap may change if necessary.

Looking at the larger picture for gold, I heard recently from Nick Barisheff of BMG Group, who believes the stock market is due for a major correction.

"The market is due for a major correction. What will cause it and when it will happen is anybody's guess — it could be tomorrow, it could be six months from now" — Nick Barisheff, BMG Group

It's impossible to know when this correction will happen, but Nick emphasized the importance of acting before it's too late. He pointed out that investors are typically slow to get out of the market once a crash actually begins — they wait for a turnaround, and by the time it's clear there won't be one, they've experienced big losses.

In his opinion, the solution is to get out of the stock market early and transfer money into gold.

Here's how Nick explained it:

"Instead of taking your money off the table and going into cash … you go to gold (because cash is devaluing daily). Gold will at least hold its own and probably appreciate … so by sitting it out in gold you can wait until the market finishes correcting and then buy back in" — Nick Barisheff, BMG Group

With gold's future in mind, we asked our Twitter followers this week what price they think the metal will be at the end of 2021. By the time the poll closed, most respondents had voted for the US$1,800 to US$1,900 range.

We'll be asking another question on Twitter next week, so make sure to follow us @INN_Resource or follow me @Charlotte_McL to share your thoughts.

Finally, in the cannabis space, INN's Bryan Mc Govern spoke with Dan Ahrens of AdvisorShares to get his thoughts on 2021 trends and what's ahead in 2022.

Dan was candid, and said if he had to choose one word to describe the cannabis market in 2021, it would be "painful." Like many others, he's been disappointed in the industry's performance — while positivity initially ran high due to excitement about potential federal changes in the US, ultimately progress has been slow.

"Cannabis started with a big run-up in January and February ... and things dragged from there" — Dan Ahrens, AdvisorShares

Still, Dan has hope for 2022 and said it will be a "huge year" for cannabis. He believes US reforms will come sooner rather than later, and in his opinion those widely anticipated changes will bring a wave of M&A activity.

Specifically, he expects to see alcohol, tobacco and other consumer packaged goods companies making deals with cannabis players, not just cannabis entities doing transactions with each other.

"Those big alcohol companies, tobacco companies, other consumer packaged goods product companies — they're waiting. They're waiting on the US" — Dan Ahrens, AdvisorShares

Want more YouTube content? Check out our YouTube playlist At Home With INN, which features interviews with experts in the resource space. If there's someone you'd like to see us interview, please send an email to cmcleod@investingnews.com.

And don't forget to follow us @INN_Resource for real-time updates!

Securities Disclosure: I, Charlotte McLeod, 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.

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Dmytro Tyshchenko / Shutterstock

Catch up on some of the biggest news of the week for the cannabis investment world.

Three political parties have formed a coalition in Germany, leading to a new government, and it has promised cannabis reform in the European nation.

Meanwhile, a popular cannabis retailer confirmed consumers will now find its products available for delivery on the Uber Eats mobile application in Ontario.

Keep reading to find out more cannabis highlights from the past five days.


Coalition of parties promises forward-looking cannabis policy

Germany, a country with comprehensive and elaborate medicinal rules for cannabis, is in a time of transition as a new government is set to begin to take over after 16 years of Angela Merkel.

Olaf Scholz, the proposed next chancellor of Germany, leads a three party coalition that will become the country's governing body. As part of its promises, talk of adult-use cannabis regulation has now gained even more momentum. A report from MJBizDaily quotes a German policy document that shows the coalition's stance:

"We are introducing the controlled distribution of cannabis to adults for consumption purposes in licensed shops. This controls the quality, prevents the transfer of contaminated substances and guarantees the protection of minors."

However, despite the promise and excitement, it remains to be seen how these ideas will be applied since no formal regulations have been drafted or approved yet.

Canadian cannabis retailer partners with popular delivery app

Tokyo Smoke, a cannabis retail operator in Canada owned by Canopy Growth (NASDAQ:CGC,TSX:WEED), announced a collaboration agreement with Uber Canada (NYSE:UBER) whereby cannabis consumers will be able to use the Uber Eats app to order products before they visit stores.

While the app won't let consumers get cannabis delivered to them, this new method opens the doors to more dynamic ways of buying cannabis.

"As a market leader in innovation and a platform used by so many Canadians, we believe this is the ideal next offering that can be done safely and conveniently on the Uber Eats app," Mark Hillard, vice president of operations with Tokyo Smoke, said in a press release.

A report from the Canadian Press indicates Ontario is considering allowing dispensaries to have delivery and pickup options made available to consumers permanently. The province allowed some of these purchasing options at the outset of the COVID-19 pandemic, but then removed them.

Lola Kassim, general manager of Uber Eats Canada, said this new end-to-end experience will provide consumers with responsible access to legal cannabis products.

Cannabis company news

  • Organigram Holdings (NASDAQ:OGI,TSX:OGI) issued financial results for its Q4 2021 period. In its report, the company notes a net loss of C$26 million despite a 22 percent uptick in net revenue to C$24.9 million. Beena Goldenberg, the newly appointed CEO of the firm, is encouraged by the market share position earned by the company, which said it became the fourth biggest producer in Canada during the reporting period.
  • Halo Collective (NEO:HALO,OTCQB:HCANF) confirmed the decision for Akanda, its spinoff company focused on international cannabis opportunities, to begin trading on a US exchange. "The number of shares to be offered and the price range for the proposed offering have not yet been determined," the company told investors in a press release.
  • High Tide (NASDAQ:HITI,TSXV:HITI) announced the acquisition of 80 percent of NuLeaf Naturals, a CBD product wellness developer, for an estimated US$31.24 million. The deal includes a three year option clause for High Tide to complete a total acquisition. "As international markets open up and as export regulations evolve, NuLeaf's cGMP-certified facility positions us to take advantage of the global CBD business opportunity," Raj Grover, president and CEO of High Tide, said.
  • Humble & Fume (CSE:HMBL,OTC Pink:HUMBF) released the financial report for its first 2022 fiscal quarter to shareholders and the market. "As the legal cannabis market in North America continues to mature, Humble remains agile and focused on providing a leading solution for brands to scale quickly and retailers to focus on their customers," Joel Toguri, CEO of Humble, said.

Don't forget to follow us @INN_Cannabis for real-time updates!

Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.

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