Nickel Unscathed by Trade Tensions… for Now

As the quest for a US-China trade deal continues to wage on, with each country slapping tariffs on the other’s imports, nickel prices found themselves on the rise this week.

Last week, US President Donald Trump’s administration put tariffs on US$200 billion worth of Chinese imports, capping off a week that saw base metal prices struggle. Then, on Monday (May 13), China retaliated by raising tariffs on US$60 billion worth of US goods, leaving some stock watchers uneasy.

Despite the international turmoil, nickel prices trended upwards this week on the London Metal Exchange (LME). Monday’s price point of US$11,720 per tonne found itself reaching US$11,920 by Wednesday (May 15).

Positivity from Trump on Tuesday (May 14) may have lent a helping hand to nickel prices, as he tweeted optimistically about reaching a trade deal with China. However, not everyone is confident that this week’s upward movement will last.

“We suspect copper and the rest of the base metals sector will struggle while the trade conflict remains unresolved, even though fundamentals remain positive,” ANZ (ASX:ANZ,OTC Pink:ANZBY) said in a note obtained by Reuters.

Echoing a similar sentiment were analysts from FocusEconomics, who in their latest report express positivity for nickel’s short-term future but say they remain wary about the big picture.

“Analysts expect nickel prices to rise over the short-term amid strong demand from China and a global supply deficit. However, fears of a full-fledged global economic slowdown remain front-and-center, while further brinkmanship in the ongoing trade war between the world’s two largest economies could weigh heavily on prices,” the report reads.

However, experts maintain some positivity for nickel’s future with the continued development of the electric vehicle (EV) movement, saying that EV batteries will help the base metal’s long-term demand and, in turn, lift prices on the horizon.

Looking ahead, firms polled by FocusEconomics predict nickel will reach averages of US$13,121 in Q4 2019, and later grow to US$13,600 by Q4 2020.

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Securities Disclosure: I, Olivia Da Silva, currently hold no direct investment interest in any company mentioned in this article.