Price of Nickel Spikes Due to High Demands and Low Stocks

Aug 02, 2019

Price of nickel, which is used as a key raw material for cathode material of a secondary battery, has increased by almost 40% compared to the price of nickel at the beginning of this year. Stock of nickel has reached its lowest point within the past six years. It is expected that the price of nickel will continue to go up as there are huge demands for electric vehicle battery while there is limited supply.
Spot price of nickel traded within LME (London Metal Exchange) has shown steep increase since last month and it recorded its highest price within the past year at $14,685 per ton.
Because stock of nickel has been decreasing rapidly recently, there is a high chance that nickel price will continue to go up for a while. As of the 30th of July, there were 143,988 tons of nickel left by LME. Compared to when the stock was at its highest, there are 100,000 tons of nickel less in the stock currently.
Barclays Capital is estimating that the spot price of nickel will increase by 30% for the next two years. Reasons why there is a sudden increase in the price of nickel are sudden increase in electric vehicle demands and lack of supplies.

Nickel sulfate that is used as a key raw material for cathode material of an electric vehicle battery (Picture: KEMCO) <Nickel sulfate that is used as a key raw material for cathode material of an electric vehicle battery (Picture: KEMCO)>

Nickel is a raw material that is needed to produce a high-capacity battery. Because energy density can be increased when nickel content of cathode material is increased, nickel is absolutely needed to increase mileage of an electric vehicle with single charge. As NCM 811 battery that has nickel content of at least 80% has established itself within electric vehicle battery market, it is likely that demands for nickel will increase even higher. Bloomberg Intelligence is estimating that annual demands for 900,000 tons of nickel will be added until 2030.
However, there are concerns about a setback to supply of nickel as Indonesian Government, which is one of the biggest areas of nickel production in the world, decided to enforce prohibition measure on exportation of nickel ores since 2022. Fact that there had been recent disasters such as flood and earthquake in Indonesia is also seen as a contributing factor to increased nickel price.
Increased demands for nickel within China are also a factor. Chinese Government is making use of copper and stainless steel for materials that go into water pipes an obligation as of today. Nickel is usually used to strengthen corrosion resistance of stainless steel.
It will be inevitable for three major South Korean electric vehicle battery manufacturers (LG Chem, SK Innovation, Samsung SDI) to feel burden from production cost once nickel price goes up. On the other hand, companies that produce cathode materials will experience higher sales.
“Although the price of cobalt, which is one of key raw materials of a battery, has finally stabilized after going through sudden increase and sudden drop for many years, demands for nickel have just started to increase on full-scale along with emergence of high-nickel cathode material.” said a representative for the industry. “Battery manufacturers must establish plans for supply and demand on raw materials from a long-term perspective.”
Staff Reporter Jung, Hyeonjung | iam@etnews.com

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