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Nickel price highest in the last 10 months – will the price growth continue?

26 July 2016
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Last week, the price of nickel on the daily trading reached a value of $ 10,900 / t which is the highest price in the last 10 months and many people wonder whether this will go on.

 

Nickel price pleasantly surprised all metal market participants, and thrilled the producers of stainless steel which are already frustrated for months because of (too) low prices of their products. Compared to the previous month price of nickel rose by more than $ 2,200 / t, which means 25%. On the 1st of June the price of nickel on the London Metal Exchange stood at only $ 8,365 / t for the three-month contract, but last Thursday it was very favorable $ 10,710 / t. After such a jump, the price of nickel has entered a phase of stabilization and currently stands at $ 10,500 / t.

 

The growth in nickel prices boosted because of serious concerns about future supply from the Philippines

 

After Indonesia banned the export of unprocessed ore in 2014, the Philippines became the world's leading source of nickel ore. Last year they officially became the world's largest producer of nickel with 465,000 tons of ore which covers 22% of world production and 97% of which is exported to China.
This source could soon be in great danger because the new president of the Philippines, Rodrigo Duterte, announced deep review of the mining industry and limitation of its negative impact on the environment. One of the suggestions is the complete closure of all open-cut mines because they do the most damage to the environment, and that is the most common type of mine that is used in the production of nickel. Some smaller mining companies were already obliged to the temporary suspension of work.

 

Nickel price development $/t - July 2016.

 

Additionally Philippines were affected by large monsoon rains that caused floods, which had a negative impact on production and transport of nickel ore. "Nickel Asia", the largest Philippine producer of nickel, mentioned the flood as the reason why their supply of nickel fell by 12% in the first 6 months of this year.


Will this level of nickel prices last?

 

Market analysts believe that the prices will soon be corrected. The current jump was primarily inflated by speculative trading and uncertainty, but after initial fears about supply from the Philippines, it seems that the new law on the protection of the environment have considerably less impact than it was initially expected. The strengthening of the US dollar will also affect the price correction

In the metal market, it's mostly believed that nickel price will fall any time soon, but there is also a possibility that it will jump up to $ 12,000 / t. It all depends on situation in the Philippines and the efforts of speculators to make quick profits based on fears about supply.

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