The spot price of nickel is rising again after a post-summer decline. Traders and industrial investors will be paying close attention to the direction of the metal.
Spot nickel stands at $14,417.60 per ounce on November 22, a 0.75 per cent rise on the previous day, which itself opened at $14,130 and rose to $14,409.
Nickel is up almost 40 per cent on its 2019 starting price of $10,604.50 but is more than $3,600 below the yearly high it reached in September. This was the highest price nickel had reached for five years.
Although the metal gained throughout the summer, this spike was triggered by the government of Indonesia announcement that it would halt all exports of the metal from 2020 in an effort to build up its indigenous smelting industry.
As Indonesia is the largest exporter of nickel in the world, followed by the Philippines, such a threat to supply unsurprisingly increased its value. The government in Jakarta temporarily halted all nickel export shipments in October as industrial buyers rushed to import ahead of the ban.
The extent to which the export ban is a bargaining chip remains to be seen. However, it has clearly succeeded in improving Indonesia’s home-grown industry. China is the biggest importer of the metal in the world, processing it into nickel pig iron (NPI), a cheaper alternative to pure nickel.
The metal, along with cobalt, is also used in the production of batteries and thus necessary if China wants to remain at the cutting edge of technological innovation. China Molybdenum, a major chinese conglomerate, has announced plans to take an indirect 30 per cent stake in the Huaye Nickel Cobalt venture on the island of Sulawesi, which will produce 60,000 tonnes a year of mixed nickel hydroxide cobalt. The firm will pay $5m (£3.89m, €4.52m) for the stake, having already injected $69m into the $1.28bn project.
It is not clear how far or for how long nickel will continue to rise, however it is very unlikely that the price of the metal will drop significantly in the near future. The upcoming ban will leave a hole of about 100,000 tonnes per annum in the nickel market.