LME nickel futures have dipped in the last week to $19,810 per tonne, down from a November peak of $21,000/t but the recent decline is more likely to be a blip in a general upward trend than a sign of a long term drop in the market.
With the international focus increasingly on the global green energy transition, demand for nickel is set to increase over the coming years and as nickel will play a huge role in electric car batteries and electric storage installations, including batteries that store intermittent electricity produced by wind, solar or other sources to be used at a later stage.
Nickel is key for energy storage
All clean technologies use nickel in some shape or form, says the Nickel Institute. The highest use is in electric vehicle batteries and in battery storage, geothermal energy, and hydrogen. It is of moderate importance for concentrating solar power, wind and nuclear, but it also plays a role in bioenergy, hydroelectric and photovoltaic solar power.
According to recent research by Bloomberg New Energy Finance energy storage installations around the world will reach a cumulative 1,028 gigawatt-hours by the end of 2030, more than twenty times larger than the 34 gigawatt-hours online at the end of 2020. This boom in stationary energy storage will require more than $262 billion of investment, BNEF estimates. Most of these storage batteries are lithium-ion devices that also contain nickel.
The two biggest growth markets over the next ten years will be the US and China, with other top markets including India, Australia, the UK, Germany, and Japan.
A short term supply squeeze?
Mining companies are fully aware of how much nickel electric cars and battery storage units will require going forward and are currently frantically looking for new deposits of the base metal. They are also outbidding one another when such deposits are found.Indonesia is one of the world’s largest producers of the metal and the country with the largest expected future production growth but that metal is largely already committed to the Chinese market and new deposits found in other countries such as Canada are becoming hotly contested.
Earlier this year Australian miner BHP and its Australian peer Wyloo Metals were trying to outbid one another for a massive new deposit in northern Ontario. Canadian nickel is of particular interest to miners because jurisdictions like the EU will only allow sustainably produced metal or metal with a carbon footprint declaration to be sold in Europe – which is not the case for Indonesian nickel.
We have been seeing some indicators of short term supply squeeze in the nickel market off the back of further Chinese efforts to support its economy, Nickel prices are already navigating close to seven year highs. Commerzbank reported that inventories “have come down tremendously” in November – e.g. on-warrant nickel inventories in LME warehouses have fallen to just over 62,000 tonnes, that’s down from more than 200,000 tonnes in April.
With China now exercising more fiscal support for the country’s economy, nickel traders are also expecting an uptick in Chinese economic activity and more demand for nickel in Asia.
For the moment, nickel is trading close to the top of this year’s range and significantly above the lows of $16,000/t in March and April. Given the demand picture for the metal prices are likely to strengthen further as we move into the new year.
Nickel ETFs
| Product Name | ISIN | Exchange Ticker | Listing Currency |
| WisdomTree Nickel Hargreaves Lansdown | Interactive Investor | AJ Bell Youinvest | Charles Stanley Direct | EQi |
GB00B15KY211 | NICK | USD |
| WisdomTree Nickel – EUR Daily Hedged EQi |
JE00B6XL6W59 | ENIK | EUR |
| WisdomTree Nickel 1x Daily Short Hargreaves Lansdown | Interactive Investor | AJ Bell Youinvest | EQi |
JE00B24DKJ77 | SNIK | USD |
| WisdomTree Nickel 2x Daily Leveraged Hargreaves Lansdown | Interactive Investor | AJ Bell Youinvest | EQi |
JE00BDD9QB77 | LNIK | USD |
| WisdomTree Nickel 3x Daily Leveraged Hargreaves Lansdown | Interactive Investor | AJ Bell Youinvest | EQi |
JE00BYQY5X15 | 3NIL | USD |
| WisdomTree Nickel 3x Daily Short Hargreaves Lansdown | Interactive Investor | AJ Bell Youinvest | EQi |
JE00BYQY5Q48 | 3NIS | USD |
