The price of Three-month nickel contract on the London Metal Exchange (LME) rose 0.4% to $17,675 per tonne on Thursday (29 February), hitting $17,830 during the session, the highest since 10 November 2023, as investors bet on nickel prices reaching floor.
In February, nickel prices rose a cumulative 8.6 per cent, the first monthly gain since July last year. Meanwhile, the price of the most active May nickel futures contract on the Shanghai Futures Exchange climbed 1.7 per cent to 137,710 yuan ($19,140) a tonne today, after accumulating a 7.1 per cent gain in February.
Dan Smith, head of research at Amalgamated Metal Trading, wrote in a report to clients that “it does feel like the super bearish view is being challenged.”
Nickel metal fell the most among LME base metals last year, dropping 45 per cent in 2023 as demand weakened and Indonesian production continued to grow. However, just before investors could breathe a sigh of relief, Indonesia poured cold water on the nickel market, which had just sparked hopes of recovery.
Septian Hario Seto, a government official overseeing Indonesia’s nickel-processing boom, said nickel prices on the London Metal Exchange were unlikely to rise above $18,000 a tonne because Indonesia would ensure the market was well supplied to reduce costs for electric-vehicle makers. Indonesia’s nickel supply accounts for more than 50 per cent of the global total.
Nickel prices fell below $16,000 per tonne at one point earlier this month due to slow demand growth. And according to some institutions, nearly half of the world’s nickel mining operations are unprofitable near current levels, forcing miners in Australia and New Caledonia to consider permanently shutting down the mines in question.
Seto said that while prices for battery metals are generally trending downwards, demand should still increase in the long term due to the rising number of electric vehicles. The government is aiming to find a balance so that nickel demand, particularly for electric vehicles, is adequately supplied. Several European automakers are said to have been actively approaching Indonesian miners to lock in supply deals, but he declined to give names.
