Nickel price skyrockets by over 60% to a fresh record high

Nickel price sky-rocketed by over 67% in early Tuesday’s session, which is one of largest moves ever recorded in the metals sector. The rise of over $20,000, its greatest daily gain on record, placed the metal at a new all-time high of over $50,000 per tonne. Earlier on Monday, it rose to $56,049.53. At the time of writing, it was at $50,271.50.

Russia-Ukraine war

The ongoing Russia-Ukraine war remains the key bullish driver for nickel price as well as other commodities.  Indeed, a statement by Russia’s President on Sunday alluded to the continuation of the current situation. Putin indicated that he is unwilling to back down until Ukraine meets his demands.

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Russia is one of the key producers of the industrial metal in the world. As such, sanctions from Europe and the US have heightened supply concerns. Besides, traders are experiencing difficulties shipping products from the region. In fact, shipping giants like MSC, Maersk, and CMA CGM has paused non-essential cargo bookings to and from Russia.

Russia’s  nickel output accounts for about 6% of the world’s production. Granted, that appears to be a rather small percentage. However, it is important to note that the country’s MMC Norilsk Nickel PJSC is a crucial entity in the sub-sector of high-quality nickel. The firm accounts for 17% of the world’s ‘Class 1 nickel’ that is better suited for batteries. There are only a few more regions that buyers can find the high-quality version of the metal in large amounts.

Nickel’s demand

Notably, the nickel market was already tight prior to the Russia-Ukraine war. The tight market was due to the supply/demand imbalance. On the one hand, there were supply concerns in the leading nickel producer in the world – Indonesia. At the same time, battery manufacturers and the stainless steel industry boosted the metal’s demand.

Indeed,  carmakers like Tesla was already looking for alternatives amid concerns of rising costs and reduced supply of cobalt and nickel. With the ongoing war, prices of raw materials will likely be a larger headwind than companies initially anticipated.

Over 70% of the world’s nickel output is utilized in the stainless steel industry. Interestingly, only 7% of the global production is used in the manufacturing of batteries. However, the expected growth of the electric vehicle sector continues to boost nickel price.