Clean nickel or cheap nickel? You can’t have both – by Anthony Milewski (Northern Miner – February 2023)

Nickel price trends have become hard to predict. Ever since the London Metals Exchange (LME) crash, in March 2022, and the subsequent canceled trades, a number of banks pulled out and took with them the Exchange’s liquidity. Nickel prices on the LME have since become so volatile that suppliers no longer view them as representative of nickel’s market value.

Today, most of the nickel being sold – particularly by the Chinese – is direct to producers and at prices based on nickel sulphate and therefore disconnected from the disgraced LME. It’s possible that the LME may eventually recover.

It’s also possible that one of the few, recently launched competing contracts will take over. However, what really matters is what is happening with Class I nickel and ESG. For investors new to the sector, here are a few basics and some recent history: nickel supply is split into Class I and Class II product.

The latter makes up the bulk of supply in the form of nickel pig iron (NPI). It’s low quality but there’s plenty of supply and it’s well suited for consumption by the hungry beast known as the stainless steel industry. With China coming back online after various Covid-related shutdowns, the future of stainless demand is strong and expected to grow steadily.

For the rest of this column: