Nickel: Another personal gamble or back in investors' focus?
Nickel: Another personal gamble or back in investors’ focus?

29 February 2024 – Is the much-maligned nickel back in the focus of investors? Or is Chinese gambling at work again? There is no denying that there is currently a flood of reports and analyses attempting to influence the price.

Nickel: Another personal gamble or back in investors’ focus?

The recent increase in reports from the nickel mining sector, rumors of possible US sanctions, difficulties in New Caledonia, and conflicting reports on price trends and availability, suggest that nickel is either back in the focus of speculators or, as so often in January, February and March, showing signs of personal gambling by a key stakeholder.

Nickel Price and Trend February 2024 Stainless Espresso
Nickel Price and Trend February 2024 by The Stainless Espresso

The state of play

  • The nickel price has moved steadily upwards since 2019, including a black swan event triggered by speculation in spring 2022 and a price of over $100,000/MT in the meantime.
  • Indonesia, the world’s largest nickel producer, elected a new president in mid-February 2024. Final results are not expected until March at the earliest. However, the winner appears to have already been decided in the form of the previous defense minister Prabowo Subianto.
  • Indonesia recently awarded new mining licenses, but these were lower than expected. In addition, a large proportion of Indonesian nickel smelters already seem to be sitting on a very low stock of ore. Prices rose by more than 14% in February compared to the previous month.
  • Chinese NPI prices have risen by around 8-10% since December 2023. And in Indonesia, they have also risen by around 3% compared to m-o-m.
  • At the same time, media reports are trying to convince us that the nickel price will remain low due to supply from Indonesia, despite reports to the contrary.
  • However, it is not entirely clear what a low price is. Compared to February 2020, when the price for the critical raw material was at its lowest level in recent years, it is still 45% higher today despite all the volatility. Trend continues to rise.
  • Mining companies around the world are currently complaining that the nickel price is too low to operate profitably.
  • Australian mining companies are calling for government aid, particularly for nickel mining, as they would otherwise not be able to survive.
  • And from New Caledonia, which has been dependent on billions in aid money for nickel mining for years, there are now calls for a state of economic and social emergency to be declared.
  • Chinese stainless steel prices rose by around 7% in the period from mid-December to the end of February.
  • In addition, higher stainless steel prices are expected from Taiwan in March 2024 in response to the rise in nickel.
  • EU stainless steel producers have also raised alloy surcharges for March 2024 by more than 3.5% in some cases.

Our latest opinion on nickel

Our opinion, based solely on the facts currently available, is that prices will and must continue their volatile rise. Otherwise, the West in particular will lose important mining companies in the critical raw materials sector. Possible initial interest rate cuts by the US Federal Reserve in 2024 are also likely to fuel commodity prices if the US economy emerges from a recession, which currently looks likely.

And not even the Indonesian government knows exactly what the real availability of Indonesian nickel ore is. This is because the delays in awarding new mining licenses may not only mean problems in the administration, but may also be a repeated sign that they no longer know where to get the ore from.

Whether Chinese gambling will be added to the mix this year remains pure speculation for the time being and will probably only become clear when we look back on events.

Latest news

Receive all the latest news once a week

Receive all the latest news once a week

Make it easy for yourself: we will remind you once a week about the latest news.

Join our mailing list to receive the latest news and updates from our team.

You have Successfully Subscribed!