LAUNCESTON, Australia, Nov 20 (Reuters) – The nickel market is learning that there is a difference in believing you are the next big thing in battery metals and the reality that you are actually still beholden to the Chinese steel sector.
Nickel was one of the darlings at last month’s annual London Metal Exchange Week, with everybody from producers, to traders and consumers talking up its prospects on the back of the expected surge in electric vehicles.
The euphoria helped drive benchmark LME nickel to a more than two-year closing high of $12,920 a tonne on Nov. 6, but since then the price has stumbled.
Nickel closed at $11,575 a tonne on Nov. 17, a drop of 10 percent in under two weeks, while Shanghai Futures Exchange contracts also showed a similar decline, dropping 9.5 percent from their peak on Nov. 7 to end at 93,630 yuan ($14,144) a tonne on Nov. 17.
The positive long-term outlook for nickel as a key component for batteries for electric vehicles hasn’t changed in the past two weeks since LME Week, but what has changed is the market view of the short-term outlook for China’s vast steel sector.