Nickel Supply Rush Seen Cooling Rally Before Batteries Boost (Bloomberg News – November 13, 2017)

Forget electric vehicles for now. Nickel must first contend with a new wave of supply from Indonesia and the Philippines, as well as a Chinese stainless steel market that’s at risk of slowing after a two-year boom.

The metal climbed to the highest level this month since June 2015, lifted by predictions of a jump in demand from electric vehicles. But prices have since retreated as the boost from new energy autos lies several years in the future and investors reset their focus on more immediate concerns.

Batteries will represent only 3 percent of demand this year, compared with the two-thirds used in stainless steel, according to the International Nickel Study Group.

“The market has been getting too excited, too soon because of the whole EV thematic — we think that has been misplaced,” said Lachlan Shaw, an analyst at UBS Group AG in Melbourne.

“It’s only really 12-18 months hence that we will have an idea of what’s really happening in the battery space, and by 2020 it could be a big part of demand growth. In the short term, nickel will remain a conventional stainless steel trade.”

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