Market Overview

This week nickel prices have been posting new records “nickeling” themselves from possible “corrosion” or decline. Prices of this metal surged to a record high in a decade above $25,000 per tonne. The rally continued on Tuesday after the trading session opened with a gap of $25,370 per tonne.

Technological, market-driven, and political factors are also pushing prices to the top. The demand went up as the pandemic fades and the economy recovers, while car and aircraft manufacturing, chemical and petrochemical industries, green economy and consumer discretionary are responsible for most of the demand hike. The demand is also driven by China as its economy is booming while consuming more than half of global nickel production. Production though is clearly lagging behind demand due various restrictions.

Nickel stocks on the London Metal Exchange (LME) in February 2022 are at 30% of April 2021 levels. The most important driver of nickel prices, however, is geopolitics. Risks of wide-scale military conflict between Russia and Ukraine in the middle of Europe and possible sanctions affecting nickel production may weaken supply as Russia produces 6% of global nickel output, delivering 5.3% to the global market.

Geopolitics is expected to be a dominating factor,  at least for this week. In the case that things will settle, prices may return to $23,800-24,200 per tonne, or to the support level where previous highs are located. But the overall upward trend is likely to be maintained over the next months as seasonal factors are expected to drive demand even higher, while the supply in February-March is rather limited by the bad weather in Southeast Asia, particularly near nickel fields in Indonesia, from which the largest deposits of this metal are mined.  

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Analysis and opinions provided herein are intended solely for informational and educational purposes and don't represent a recommendation or investment advice by TeleTrade.