LONDON (Reuters) – The bulk of nickel moving out of London Metal Exchange-approved warehouses in Asia is showing up in hidden facilities in Europe, analysts said, denting a bullish scenario of potential shortages.
LME nickel stocks have shrunk by about 40 percent this year, largely from warehouses in Malaysia, Taiwan and Singapore, but much of that metal is not being consumed, industry sources and analysts said.
Nickel is mainly used to make stainless steel, but forecasts show that more will be needed for electric vehicle batteries in coming years. It has been the LME’s top performer this year and prices were up 25 percent in June, before the wider market was hit by macroeconomic worries.
Some investors have been bullish about the sharply lower inventories, arguing that deficits and strong consumption were finally cutting stockpiles and raising prospects for shortages.
But trade data shows that much of the nickel departing Asia is arriving in the Netherlands, a warehousing centre with both LME depots and non-registered ones with cheaper rental rates.