Contracts for the industrial metal on the London Metal Exchange jumped 4.6% to $20,963 per metric ton on Wednesday, the highest since May 2014.
Nickel — used in kitchen wares, smartphones, medical equipment, transport, buildings, batteries, and jewelry — has doubled in price this year.
“At this juncture, watch the critical cash-three month gap, which is already backwardation and has the scope to widen further. It was last at $83/ton, the biggest in two years. Spiking spreads have been an important feature for record-setting tin, which has rallied almost 90% this year, and similarly in the copper market,” Bloomberg said.
Tightening supply is primarily due to Vale SA, one of the world’s top nickel producers, slashing its production outlook for the year due to a strike at its Canadian mine. MMC Norilsk Nickel PJSC, the world’s largest refined nickel producer, reported declining output in the third quarter. The second-largest metal producer, the Philippines, said output this year would be 10% less than the annual average due to torrential rains and declining vessels for transport.
On Tuesday, Vale said its nickel output would be in the range of 165,000 to 170,000 tons versus earlier projections of 200,000 tons. This news was one day after courts suspended operations at its Onca Puma mine in Brazil.
On Wednesday, Tesla’s CFO Zachary Kirkhorn revealed the company had seen an impact from soaring industrial metal prices, particularly aluminum and nickel. He said this prompted Tesla to swap out nickel-based batteries iron-based batteries for its standard Model 3 and Model Y models across world markets to save costs.
BloombergNEF expects the nickel price to remain over $18,000 per ton for the year.
The latest rise of industrial metals comes from China, where smelters have been taken offline as the Beijing reduces power to energy-intensive industries amid a power crunch.
Inflation expectations have been rising on the backs of higher metal prices.
Tightening nickel supplies can extend price gains, echoing recent ramps in aluminum and copper markets.
Thu, 10/21/2021 – 15:21
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Author: Tyler Durden