LONDON (Reuters) – Was it another false dawn for the nickel market? Last week’s rally to a five-month high of $13,350 per tonne on the London Metal Exchange has gone into sharp reverse. Nickel was trading back at $12,385 on Tuesday.
The trigger for the price surge was concern that Brazilian producer Vale’s nickel operations would suffer some sort of knock-on effect from the devastating tailings collapse at the company’s Brumadinho iron ore mine.
Such fears have proved unfounded. So far. There may still be ramifications for Vale’s Onca Puma ferronickel operations in the state of Para. But nickel’s ability to rally at all in the current gloomy macroeconomic environment is testament to continued investor interest in the metal’s potential demand boost from the electric vehicle (EV) revolution.
Even after the rapid descent from last week’s highs, nickel is still the best performer among the core LME metals pack. It is up 14 percent since the start of January, compared with zinc’s 10 percent gains.
THE VALE EFFECT
Although most analysts were quick to dismiss fears that Onca Puma would be impacted by the regulatory scrutiny surrounding all of Vale’s tailings dams in Brazil, nickel’s price reaction wasn’t irrational.
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