Supply challenges, price fluctuations, and strategic shifts among major producers. It was a busy Q3 and we thought we’d share some highlights.
Nickel Prices Reach Seven-Year High: In September, nickel prices surged to $20,225 per tonne on the London Metal Exchange, the highest since May 2014.
Production Declines Among Major Producers: Several leading nickel producers reported decreased output in Q3 2021. Norilsk Nickel’s production dropped by 15.5% year-over-year due to industrial incidents, while Vale’s output fell by 36.5%, impacted by labor strikes and operational disruptions.
Global Nickel Market Surplus: The International Nickel Study Group reported a global nickel market surplus of 23,900 metric tons in September 2021, indicating a shift from previous deficits and reflecting changes in supply and demand dynamics.
Increased Nickel Exploration Budgets: Driven by high nickel prices and optimism over its use in electric vehicle batteries, nickel exploration budgets in 2021 reached a seven-year high of $422.9 million, up from $333.9 million in 2020.
Indonesia’s Export Tax Consideration: Indonesia considered imposing an export tax on nickel products with less than 70% nickel content to encourage domestic processing and support its goal of developing a full nickel supply chain, from extraction to electric vehicle production.
BHP Opens Australia’s First Nickel Sulphate Plant: BHP produced the first nickel sulphate crystals at its Kwinana refinery, marking a strategic move to meet the expected surge in demand for battery-grade nickel. The plant aims to produce 100,000 tonnes annually, enough for 700,000 electric vehicle batteries.
China’s Nickel Demand Strengthens: China’s imports of nickel feed for stainless steel production remained strong, with significant increases in imports of ferronickel, nickel ore, matte, and intermediate products, reflecting robust demand in the stainless steel sector.
Nickel Market Volatility: The nickel market experienced volatility, with time-spreads shifting to backwardation and registered inventory levels declining, indicating tightness in the market and contributing to price fluctuations.
Anthony Milewski
Chairman, Nickel 28 Capital