Mass production of electric vehicles (EVs) will transform the nickel market, which must evolve from pricing and supply perspectives in order to meet the anticipated surge in demand.
“We’re already preparing [to enter the EV space] but we’re going to preserve optionality until it’s time and we can extract value,” Robert Morris, Vale’s executive vice president of sales and marketing for base metals, told Metal Bulletin.
Nickel prices are not nearly high enough to incentivize more production to come online. “If we want to supply this battery revolution with the appropriate nickel units, prices will have to be substantially higher,” he said, adding that it would likely take a couple of years for that to occur.
Morris didn’t have a specific nickel price point in mind for warranting additional production but it would “certainly” need to be above $17,000 per tonne, he said.
The London Metal Exchange’s three-month nickel contract closed the official session at $14,355 per tonne ($6.51 per lb) on Monday May 14. The contract had hit a more than three-year high of $15,790 per tonne on April 19.
Demand for nickel in the EV space is expected to total 36,000 tonnes in 2018, according to Frank Nikolic, Vale’s manager of market intelligence for base metals.
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