Commodities, Finance, News, Nickel

Nickel reaches fresh 10-year high, so what’s next?

LME

The nickel price has jumped to its highest mark since August 2011 as supply struggles to keep up with the demand for the sought-after base metal. 

According to the London Metal Exchange, nickel traded as high as $US22,850 ($31,698) per tonne on Friday – a far cry from the lows of 2020 where the price fell as low as $US11,200 per tonne in April of that year. 

It comes as the battery evolution hits full tilt which is seeing electric vehicles produced at record rates. 

According to research firm Canalys, global EV sales increased by 160 per cent in the first half of 2021 when compared to 2020. Canalys found total global car sales were up 26 per cent across the same timeframe. 

While nickel is primarily used in the world’s stainless steel industry (approximately 70 per cent of the global nickel production), the battery sector’s demand for the commodity is expected to increase significantly. 

S&P Global Platts noted that nickel for the battery sector could make up 35 per cent of total demand by the end of the decade. 

Lithium-ion batteries used in electric vehicles require a higher purity nickel (i.e. Class 1 nickel of more than 99.8 per cent purity) than the nickel pig iron and laterite ores used in the production of stainless steel. 

Through its Nickel West operations in Western Australia, BHP is one mining company who produces nickel at Class 1 purities. 

After nickel sulphide ore is mined at BHP’s open cut and underground operations in the Northern Goldfields, it goes through a refinement process involving the Kalgoorlie nickel smelter and Kwinana nickel refinery, where it reaches 99.8 per cent purity as an end product. 

Fitch Solutions recently forecast a slowdown in nickel prices to begin 2022 before a steady rise from 2023-2027. 

“Ultimately, higher prices will be sustained by persistent annual production deficits,” Fitch stated. 

“Demand growth will be driven by expanding global battery production to supply the electric vehicle and utility storage industries over the coming years.” 

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