After the price of nickel has skyrocketed to 2007 levels, reaching 48,226 dollars per ton, amid concerns about interruptions in Russian supply, the world’s third largest exporter of the metal, specialists believe that the increases will not be extraordinary or sustainable for a long time, although inventories are beginning to worry.
“The Russian invasion of Ukraine has raised fears of a metal shortage, as Russia produces 17% of the world’s supply of nickel. Fortunately, nickel processing is about to get a boost from Chinese miner Zhejiang Huayou, which is opening several plants in Indonesia,” says an analysis published in The Motley Fool.
Trading Economics, a provider of financial information, exposed in an analysis that Western sanctions against Russia raised concerns about the metal supply, as it is the third supplier of the metal in the world, with 250,000 tons extracted last year, behind only Indonesia. and the Philippines.
He added that nickel, used mainly to make stainless steel and electric vehicle batteries, was recovering before the invasion, as strong demand from the stainless steel and battery industry depleted inventories, which amount to 76,830 tons in warehouses. listed on the London Metal Exchange (LME) their lowest level since 2019.
The EY firm indicated in a study that Rystad Energy estimates suggest that nickel demand will increase to 3.4 million tons in 2024, from the current 2.5 million tons. This means supplies will fall short of demand, as both existing and announced projects will be able to produce just 3.2 million tonnes.
“Potential supply shortages could prompt major producers to review nickel sources previously considered commercially unviable. Today, however, it takes longer to get a new deposit up and running, in part because of geological challenges and stricter environmental regulations. So it is very likely that there will be a nickel shortage,” the document reads.
On March 8, nickel soared, for a moment, to an all-time high of $101,365 a tonne, though it later dropped to $81,052. The previous day it concluded at 48,078 dollars a ton. This prompted the LME to halt trading in the metal until at least Friday, March 11. The Shanghai Futures Exchange also suspended trading, after it hit its limit for three consecutive days.
Richard Mills, an analyst at Kitco.com, wrote in a note that nickel prices were already rising before the geopolitical crisis between Russia and Ukraine began.
“Tight market fundamentals were reflected in low warehouse inventories and strong demand for nickel to be processed into battery cathode material for electric cars. A disruption in supplies would not only harm end users, but the entire lithium-ion battery supply chain,” the report reads.
Since Russia launched a “military action” in Ukraine, the price of nickel has risen about 130 percent. Its price, in fact, has doubled in 2022.
Analysts estimate that the price of the metal will normalize after the first quarter of the year and will remain stable until 2025.
According to the analysis site Capital Com Bel, UBS indicates that the target price for this year of the metal will be 26,000 dollars a tonne, from 24,000 dollars previously estimated.
The Swiss investment bank adjusted higher for lower inventories and supply risk from the conflict between Russia and Ukraine.
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