Nickel rally being fuelled by batteries ‘hype’, analysts warn – by Henry Sanderson (Financial Times – January 2021)

Metal up 70% since last March despite forecasts that supply will continue to exceed demand

Nickel’s dramatic rally is being fed by “hype” over electric vehicles and faces a challenge from new sources of supply in the coming years, traders and analysts have warned.

The price of nickel on the London Metal Exchange has risen by about 70 per cent since its low last March to $18,410 a tonne, as speculators bet it will benefit from rising sales of electric vehicles — which are increasingly using batteries with a higher nickel content.

Forecasts of sharp EV growth, encouraged by policymakers’ push for a “green” recovery, have lifted a range of input metals in recent months, including copper and lithium.

“The rally has nothing to do with fundamentals,” said Andrew Mitchell, an analyst at Wood Mackenzie. “It is EV hype.

If one looks at the supply/demand balance last year there was a significant surplus, and we expect surpluses this year and next.”

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