Nickel price hit highest in a month with inventories close to record lows

The most actively traded February nickel contract on the Shanghai Futures Exchange ended daytime trading up 2.5% at 154,840 yuan ($24,300.06) a tonne. Earlier in the session, prices rose to 155,160 yuan, a peak since Nov. 25.

Three-month nickel on the London Metal Exchange was up 0.9% at $20,915 a tonne, as of 0305 GMT, a jump of more than 15% since last January.

“Nickel prices are expected to remain strong in the short-term amid low inventories and destocking expectations, but increasing capacity from Indonesia will curb further increase in the medium- to long-term,” analysts with Jinrui Futures wrote in a note.

With stainless steel producers stepping up maintenance in the first quarter, nickel demand could weaken from the previous quarter, according to the analyst.

About 70% of the world’s nickel production is consumed by the stainless steel sector, while batteries take up a modest 5%.

Refined nickel inventories in ShFE warehouses were last at 4,859 tonnes, close to a record low of 4,455 tonnes hit in August 2021.

S&P Global Market Intelligence forecasts global primary nickel consumption to rebound year-on-year due to stainless steel capacity expansions in China and Indonesia.

“Demand outside China is expected to be the main driver of global growth in volume terms in 2022 and global consumption is forecasted to rise at a compound annual growth rate of about 7% between 2020 and 2025,” said S&P.

“The battery sector’s nickel demand is also expected to accelerate substantially, with many predicting it to near 35% of total demand by the end of the decade.”