Nickel is making a comeback. A strong pandemic recovery rally was rudely interrupted in March, when China’s Tsingshan Group said it intended to produce battery-grade nickel at its Indonesian operations.
Converting what is currently a process stream for Tsingshan’s stainless steel production to an input for electric vehicle cathode chemistry would undermine nickel’s bull narrative of a looming shortfall of battery-quality metal.
The London Metal Exchange (LME) three-month nickel price slumped from a seven-year high of $20,110 per tonne to $15,665 over the first half of March. It has since clawed its way back to a current $18,400 with ripples of tightness appearing across nearby time-spreads against a backdrop of falling LME inventory.
Nickel’s current revival has very little to do with either Indonesia or battery demand. Rather, it’s down to a combination of a resurgent stainless steel sector and a lengthening list of production hits in the world outside Indonesia.
You could call it the revenge of nickel’s old fundamentals. The Shanghai Futures Exchange’s (ShFE) stainless steel contract has just overtaken the hot rolled coil contract as the best performer within the domestic steel complex.
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