The speculative fever for electric-car metals is pushing to nearly four-year highs prices for nickel — a key ingredient in stainless steel.
Nickel is the top industrial metal and among the best-performing assets of 2018, with futures contracts on the London Metal Exchange up 21%, as battery manufacturers, mostly in China, and investors across the world hoard the metal in anticipation of a shortage.
For years, nickel was one of the worst-performing commodities as supply far outpaced demand from industries like auto manufacturing and construction. Its dramatic rally this year is the latest sign of the hype surrounding emerging technologies like car batteries.
Currently, batteries only account for a tiny slice of total nickel demand, about 3%, according to analysts. But some in the metals industry expect that figure to ramp up as more consumers switch to electric cars. Analysts at Citigroup estimate battery usage could hit as much as 40% in the next 15 years.
“These sort of longer-term generational changes don’t happen that often, and when they do, investors and speculators want to anticipate,” said Robin Bhar, head of metals research at Société Générale. “If battery usage increases as it could, you’re not going to have enough supply.”
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