The nickel market is experiencing its worst supply shortages since 2007. LME inventories have been falling every day since October.
"inventory continues to decline, demon" Nickel "Hengsheng stainless steel steel enterprises may fall into a cyclical trough.
Long-term contracts related to spot prices and battery processors still face the risk of rising raw material costs.
In 2007, nickel stocks fell sharply and prices soared. Today, inventories are also falling sharply and prices are soaring. However, inventory levels are not as low as they were in 2007, and prices are no more than $24000 a tonne. Prices peaked at $50000 a tonne in the spring of 2007 and fell sharply over the next 18 months.
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At that time, there was a shortage of refined nickel from suppliers such as Indonesia, while demand from emerging market China was growing rapidly. Today, China has not only a strong stainless steel industry driving spot demand, but also demand for electric car batteries.
Goldman Sachs estimates that the global nickel market will have a supply shortage of 159000 tons in 2021, compared with a previous estimate of a surplus of 49000 tons. Goldman Sachs expects the market to have a slight shortfall of 30000 tons this year.
Expected cooling of stainless steel industry
Although the stainless steel industry is likely to cool down this year, demand from the fast-growing battery industry will accelerate with the acceleration of electric vehicle reform. Ford announced this month that it would double production of the Fmur150 lightning electric pickup truck because of strong demand. Meanwhile, the Financial Times reported that one in four new cars in the UK was a battery car in December, while total sales of new energy vehicles in China jumped 169 per cent last year.
"can the drop of 1000 yuan / ton of stainless steel be stable a year ago? [SMM analysis]
The nickel market is tight.
It is not surprising that both speculators and consumers are buying nickel. Spot prices are still in a large deficit, with a three-month price premium over a long period of time, usually indicating a tight supply in the spot market.
"Nickel prices skyrocketed and plummeted to draw attention to the trading deposits and handling fees adjusted in the previous period [SMM analysis]
Test 2007 highs
Can the price of nickel test its peak in 2007? It's going to be a long way. New ore and refining capacity will be put into production, especially in Indonesia. However, the timing of production is still uncertain. The technical side is new, so there is still a risk of deficiencies on the supply side. At the same time, demand for stainless steel is likely to cool by the end of the year, especially in China, the largest consumer. But it is not surprising that carmakers are scrambling to reach long-term supply deals. After all, there are still uncertainties and limitations in the supply market.
But securing supply and nickel prices face two major challenges. Even if long-term contracts are related to spot prices, and even as the electric car market finally gains some widespread acceptance, battery makers still face the risk of rising raw material costs.
Original title: "tight supply of nickel will further push up prices"
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