Is This a Temporary Setback or a Long-term Trend?

In recent developments within the global nickel market, the trajectory of prices has undergone a significant downturn, reflecting a complex interplay of economic factors and strategic decisions.

As reported by S&P Global Commodity Insights, the London Metal Exchange (LME) three-month closing nickel price experienced a notable decline from $19,830 per metric ton at the end of May to $17,891 per ton by June 10. This movement marks a pivotal shift, as it is the first time since mid-April that nickel prices have dipped below the $18,000 per ton threshold.

The retreat in nickel prices can be largely attributed to decisive actions taken by investment funds. These investors opted to liquidate their long positions amid a backdrop of strengthening US dollar and less-than-stellar manufacturing data emerging from China. These factors collectively exerted downward pressure on nickel prices, overturning earlier gains made in May when prices surged to a nine-month high of $21,615 per ton.

During that period, concerns over potential supply disruptions and increased investor optimism in the base metals sector had fueled a bullish trend. However, as economic indicators shifted, investors reevaluated their positions, leading to a swift reversal in nickel prices.

Beyond these market dynamics, the strategic maneuvers of key global players have also influenced nickel’s price trajectory. Notably, the United States has expressed a strategic interest in forging a partnership with the Philippines, the world’s second-largest nickel producer, to secure nickel supplies essential for its burgeoning battery sector. Discussions are underway to enhance infrastructure and production capabilities in the Philippines.

Looking forward, analysts at S&P Global Commodity Insights predict that the global primary nickel market will continue to face challenges driven by oversupply conditions throughout the remainder of the year. Despite bullish sentiments, the underlying imbalance between supply and demand is expected to restrain nickel prices in the short term. However, the long-term outlook for nickel remains positive, primarily due to its critical role in the energy transition and increasing demand from the electric vehicle and renewable energy sectors.

Stakeholders should brace for continued market volatility with limited immediate price recovery.