Nickel broke above $12,000 a tonne on Tuesday after a leading forecaster said the outlook for the metal was one of deepening deficits, falling warehousing stocks and ultimately rising prices.
Nickel, which is primarily used to make stainless steel, has been one of the least-liked industrial metals of recent years, weighed down by excess supply and bulging stockpiles. But sentiment has started to shift as analysts and investors identify the fact that electric vehicles are likely be powered by batteries using nickel-containing chemistries.
Unlike other key battery materials such as lithium and cobalt, nickel is easier for investors to trade via futures contracts in London and Shanghai. There are also more ways to establish exposure to the metal through the equity market and large listed mining companies such as Glencore, Nornnickel, Sherritt International and Vale.
In a note, Wood Mackenzie said the expected boom in battery-powered vehicles would aggravate a structural shortage in the nickel market it sees emerging between now and 2025.
“The dominant lithium-ion battery type for electric vehicles is expected to have a nickel chemistry,” said Sean Mulshaw, principal analyst at Wood Mackenzie. “Sourcing this quantity of nickel will be a challenge as most of the incremental supply through to 2025 will be [either] ferronickel or nickel pig iron, both of which are unsuitable raw materials for nickel sulphate batteries.”
Wood Mackenzie expects sales of passenger EVs to rise from 2.4m in 2016 to 14.2m in 2025. Based on that forecast — which is at the more conservative end of market expectations — it sees nickel demand in batteries rising from 40,000 tonnes to 220,000 tonnes in 2025.
Source: www.ft.com
