Nickel Prices Rise to 10-Year High Thanks to EV Production — Is Now the Time To Invest?

Electric Car Battery Pack.
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Nickel is one of the most widely used minerals for electric vehicle batteries. Considering this commodity stock has climbed to its highest level in a decade as stockpiles decline, it could present some challenges for EV producers. 

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The metal rose by more than 4 percent on Jan. 12 to a 10-year high of $22,745 a metric ton, Financial Times reported, and 12 percent over the past month. Stockpiles in warehouses approved by the London Metal Exchange declined for the 51st day in a row and in China, official warehouses are near a record low at 4,859 metric ton.

Jeremy Weir, chief executive of Trafigura, one of the world’s biggest commodity traders, said that global inventories were at serious levels and prices were “starting to move to reflect that,” Financial Times added.

The nickel demand of the EV battery sector is expected to accelerate, with experts predicting it to be near 35% of total demand by the end of the decade, S&P Global Platts noted. However, Colin Hamilton, analyst at BMO Capital Markets, told Financial Times that the nickel supply would need to increase by 200,000 metric tons to prevent a drawdown of inventories in 2022.

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“The much tighter starting point for the market this year alongside strong EV trends ahead means this likely is no longer enough to generate an aggregate shift back into clear surplus,” Nicholas Snowdon, analyst at Goldman Sachs, explained to Financial Times.

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He added that he has a 12-month target price of $24,000 for nickel, which is a rise of roughly 6% from the current level.

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Josephine Nesbit is a freelance writer specializing in real estate and personal finance. She grew up in New England but is now based out of Ohio where she attended The Ohio State University and lives with her two toddlers and fiancé. Her work has appeared in print and online publications such as Fox Business and Scotsman Guide.
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