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Will Nickel industry continue booming for long?

Team Veye | 14 Dec 2020

Will Nickel industry continue booming for long?

As the economy rebounds from the coronavirus, Nickel futures have started to trade above $17000 per tonne, the highest level since October 2019, amid increasing demand from Chinese steel mills.

Besides Tesla sending encouraging demand signal to nickel producers and calling on them to produce more of the battery metal, demand for battery-grade nickel continues to surge from producers in Germany and Indonesia.

This has led to a sharp rebound in nickel prices. Last year, Nickel prices had surged to the highest levels in five years amid global supply fears stemming from Indonesia, which is the world’s largest nickel producer. At that time the incitement had been the announcement by Indonesian Government that the country would ban ore exports from December.

Delegates at Australian Nickel Conference held in October 2020, had expressed optimism that the country's nickel exports could rise significantly in the next two years along with a significant increase in the domestic nickel industry over the next decade.

The government forecasts in its latest Resources and Energy Quarterly report indicate that Exports could rise from 225,000t in 2018-19 to reach 333,000t in 2020-21 and 374,000t in 2021-22,

Nickel remains a vital metal to power the New Green Revolution as a specific component in the mass manufacturing of electric vehicle batteries. It also remains attractive to developing countries as input for stainless steel.

Nickel is a US$20+ billion per year industry with over two thirds of the metal today going into stainless steel production. The global nickel market is expected to grow at a high CAGR during 2020-27 by analysts. Increasing demand for nickel in automobile batteries, energy storage systems in wind turbines or solar panels at a lower cost is the major driving factors for the market growth.

With nickel prices forecast to continue rising over the five years through 2025-26, industry revenue is expected to rise strongly over the period.

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