RPT-COLUMN-Nickel’s “electric premium” crushed by trade tensions – by Andy Home (Reuters U.S. – September 18, 2018)

https://www.reuters.com/

LONDON, Sept 18 (Reuters) – Nickel has finally succumbed to the base metals price rout. It is still the best year-to-date performer among the core six metals traded on the London Metal Exchange (LME)

But at a current $12,400 per tonne, LME three-month metal is, like the rest of the pack, now trading below year-start levels. The excitement around the potential boost to nickel demand from its use in electric vehicle batteries hasn’t been completely dispelled.

But the “electric premium” in the price has been crushed by the broader market concerns about the escalating trade stand-off between the United States and China.

The tensions between nickel’s electric future and the metal’s current stainless steel reality are all too evident and if anything are going to become more acute the further the price falls.

REALITY CHECK

Nickel was on a roll in the first half of this year, up 25 percent in early June, when it was trading above $15,000 per tonne. Funds were enthused by the narrative of a step-change in usage thanks to nickel’s input into the lithium-ion battery technology that is driving the electric vehicle revolution.

It helped that future expectations were complemented by the bullish reality of fast-falling exchange stocks of nickel.

Inventory is still falling by the day but there is a growing awareness that a good part of what is leaving is simply being relocated as the battery supply chain, which needs the sort of Class I nickel traded on both London and Shanghai markets, preemptively builds its own stocks.

For the rest of this article: https://www.reuters.com/article/metals-nickel-ahome/rpt-column-nickels-electric-premium-crushed-by-trade-tensions-andy-home-idUSL8N1W44L4

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