BofA sees nickel taking big COVID-19 hit – by Henry Lazenby (Mining Journal – April 2020)

With global GDP forecast to grow at just 0.3% this year, translating into a 2.8% year-on-year contraction to nickel demand, about 150,000 tonnes of surplus metal or 10% of global supply could accumulate.

Industry players including Vale, Sumitomo, Glencore and South32 have all shown concern over nickel fundamentals, prompting production responses that “should ultimately limit the supply overhang”, according to the bank.

“Similar to copper, we therefore believe prices could rally, when a treatment (not necessarily a vaccine) is found or the isolation measures show success,” BofA said.

The overall commodity complex has generally faced “immense headwinds” in recent weeks over the COVID-19 outbreak. Nickel has been no exception, with prices to date falling 19.6% year-on-year, despite a constructive longer-term outlook pinned to rising electric vehicle penetration.

BofA also sees inter-country dynamics between China and Indonesia not changing in the foreseeable future. There has been apprehension over the build-up of Indonesia’s nickel-stainless steel supply chain.

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