Healthy demand, shortages – and now the Russia-Ukraine crisis – spur nickel’s climb to decade highs

Nickel prices climbed to their highest in more than a decade last week as low inventories, healthy demand from manufacturers of electric vehicle batteries and worries about supplies from Russia spurred buying. Benchmark nickel on the London Metal Exchange was up 1.5% at $24,515 a tonne, having earlier hit $24,610 a tonne, the highest since August 2011.

“There will be a risk premium for nickel given the potential for disruptions from Russia and inventories are low,” said ING analyst Wenyu Yao. “Strong electric vehicles sales in China continue to drive the tightness for the nickel that is suitable for making nickel sulphate.

The possibility of further sanctions against Russia are behind concerns about supplies from the country which accounted for about 10% of global mined production last year.

Shortages of nickel have led to draws on stocks in LME registered warehouses, which at 83,274 tonnes have dropped 68% since April last year. Stocks of bagged briquette easily crushed into small particles and dissolved in sulphuric acid to make nickel sulphate for batteries, at 62,940 tonnes are down 69% since last April. Cancelled warrants — metal earmarked for delivery — at 52% suggest another 43,638 tonnes is due to leave the LME system.

Sales of new energy vehicles in China reached 431,000 in January, an annual increase of 135.8%, according to data of the China Association of Automobile Manufacturers. Copper was up 0.1% at $9,967 a tonne, aluminium climbed 0.6% to $3,282 a tonne, zinc gained 0.5% to $3,592 per tonne, lead slipped 0.1% to $2,346 a tonne and tin fell 0.3% to $24,515.per tonne.

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