Nickel

Nickel is an important base metal used in stainless steel, electronics and specialist engineering.

Yet it's also an important component in lithium-ion batteries, and we expect it to ride the electric vehicle boom for years to come.

As the EV industry continues to expand a greater proportion of nickel is being directed to battery production — forecast nickel demand from the EV battery industry is set to more than double by as soon as 2025.

Against that backdrop, the nickel price on the Londong Metals Exchange reached record highs this year although it was extremely volatile.

Who else likes it

International Energy Agency (IEA)

The IEA expects nickel demand to increase by 7 to 19 times between 2020 and 2040. This will be driven by conventional demand from stainless steel as surging demand from batteries, mostly to supply the electric vehicle boom.

Not all batteries use nickel, but nickel-manganese-cobalt (NMC) cathode batteries are expected to remain as a dominant battery chemistry in Western markets due to their superb energy density, combined with a good long cycle life.

Last year the IEA forecast that 60 new nickel mines would be needed by 2030.Fitch Solutions
Fitch expects strong growth in nickel ore production in 2022 and 2023, and says resilient nickel prices and a strong demand outlook will boost investment in nickel mining across the world.

Fastmarkets

Fastmarkets sees demand for nickel from the battery industry set to increase significantly.

It says demand for nickel for use in EV batteries represents around 280,000 tonnes per year of nickel metal globally, corresponding to around 10% of worldwide nickel demand, but that this figure is set to grow significantly. Fastmarkets forecast demand from the battery industry to increase to close to 314,000 tonnes in 2023 and to 668,000 tonnes by 2025.

Rodney Hooper

Hooper, a lithium and battery metals consultant at RK Equity Advisors says, has a similar view, observing that, “(EVs now) represent a big percentage of nickel demand, and they will continue to rise going forward.”

ING’s Ewa Manthey

The ING commodity strategist says that ING sees nickel prices “hovering between US$20,000 and US$20,500 (per metric ton) over the first two quarters of 2023 before gradually increasing to US$21,000 in 3Q and US$22,000 in 4Q as the global growth outlook starts to improve.”

BHP Executive, Jess Farrell

The BHP executive said that BHP anticipates global demand for nickel to surge as much as fourfold over the next 30 years as EVs almost entirely replace traditional cars.

What about the bear case?

Nickel had a good year in 2022, with prices ending the year around 50% higher. This was mostly due to a tight market with strong demand and limited new supply.

However, while another tight year is generally forecast for 2023, Indonesia is set to significantly ramp up production and bring a significant amount of new supply online over the coming 12 months. This could work to moderate prices in the near term.