Nickel prices are tipped to keep climbing in 2021 following a volatile year that saw the commodity beat expectation, despite some weakness early in the year.

The silvery-white metal saw its value drop between January and March (trading for as little as $US11,055 at one point) as coronavirus containment measures were rolled out worldwide. 

But as the pandemic continued to spread around the globe, nickel prices enjoyed a significant rebound – driven by an Indonesian ore export ban and the Philippines pressing pause on production.

Meanwhile China’s stainless steel industry began to reopen, boosting demand for the metal and helping push it to $US17,650 per tonne on Tuesday 15 December – its highest level since October 2019.

“[The outlook is] certainly very bullish” according to Justin Werner, managing director of the $2.8Bn Nickel Mines (ASX: NIC).

Nickel Mines is a globally significant producer of nickel pig iron – a cheaper alternative to pure nickel used by Chinese stainless steel manufacturers in response to higher nickel prices.

Nickel pig iron typically trades at 90% of the price buyers are paying for pure nickel on the London Metal Exchange (although it has occasionally traded at a premium).

Growing electric vehicle demand to underpin price growth

Speaking to guests of Reach Markets’ fortnightly ‘The Insider’ webcast, Mr Werner added that global electric vehicle sales have also climbed, helping support the price of nickel.

Globally, Mr Werner said, year-on-year electric vehicle sales for the 12 months ending in October have lifted 27%, while in Europe alone that figure hit 120%.

“Obviously those are positive drivers for the nickel price,” he said.

“There isn’t a lot of excess nickel capacity, particularly in the nickel and cobalt space so we think moving forward it all bodes well.”

The possibility of a supply shortage even prompted calls for miners to increase their nickel production from electric vehicle billionaire Elon Musk – chief executive of Tesla, Inc. 

“Wherever you are in the world, please mine more nickel… Go for efficiency and environmentally-friendly nickel mining at high volume,” the celebrity tech executive said. 

“Tesla will give you a giant contract for a long period of time if you mine nickel efficiently and in an environmentally sensitive way”. 

Mr Werner recently joined us for our fortnightly webcast ‘The Insider’. This article summarises some of the information he shared with us during the session. You can watch a full recording below, or you can click here to book into our next session where we will be joined by Lotus Resources Limited (ASX:LOT) and Matador Mining Limited (ASX:MZZ). 

‘The Insider’ is a great way to hear directly from the CEOs of fast growing Australian businesses. You will get valuable insights to their industries and companies future prospects.

The Insider – Event Details:

Date: Wednesday, 20th January Time: 12 pm AEDT Format: Online, 2 x 15 minute presentations

This is a free event. Click here to book your spot.

Past performance is not a reliable indicator of future performance.

Sources:

• BHP responds to Elon Musk’s call for more nickel, as miners wake up to EV market
• Nickel Outlook 2021: Strong Demand Recovery Ahead, Supply to Increase
• Creating a ceiling for future nickel prices
• ABOUT NICKEL MINES
• LME NICKEL OFFICIAL PRICES, US$ PER TONNE