The price of nickel spiked more than 60% Monday, one of most extreme moves ever seen on metal markets. Here’s why that matters and who’ll take a hit.
The metal added more than $10,000 to trade at a 15-year high above $40,000 a ton — the biggest-ever daily dollar gain in the 35-year history of the contract.
Q4 2021 hedge fund letters, conferences and more
Russia is one of the world’s biggest suppliers of the metal, and the fear of sanctions or the inability to ship the metal has spooked an already tight market. Liquidity deteriorated dramatically in the nickel market overnight as sellers rushed to the sidelines, leading to sharp price jumps between trades as short-position holders scrambled for buy backs.
More than 70% of the global supply of nickel goes into making stainless steel. Yet it’s the metal’s use in batteries for electric vehicles that has really caught the market’s attention in recent years.
Currently, only about 7% of the supply goes to battery makers, but exponential growth has been forecast as the take up of EVs is forecast to boom in the coming years.
Russia supplies about 6% of global supply. Yet its importance to the battery industry is much higher. Russia’s MMC Norilsk Nickel PJSC, which operates mines in far northern Siberia, supplies about 17% of the world’s so-called “Class 1” nickel, a high-purity form that’s more suitable for batteries and can be sourced in large quantities from only a few other locations.
Read the full article here by Thomas Biesheuvel and Craig Trudell, Advisor Perspectives.
