SHANGHAI – Nickel rocketed to a two-year high in London and climbed by the daily limit in Shanghai, as investors bet on a long-term boost to demand from the rise of electric cars.
Prices advanced as much as 3.9% to $12,780 a metric ton on the London Metal Exchange, the highest since June 2015, before trading at $12,590 a ton by 10:44 a.m. in Singapore. That adds to a 5.3% gain on Tuesday, after Trafigura Group joined Glencore in unveiling bullish usage forecasts. The metal was up 4.3% in Shanghai.
“The market is awakening to a new driver of demand growth, which I suppose had been not really clear until just recently,” Daniel Hynes, senior commodity strategist at Australia & New Zealand Banking Group, said by phone. Demand from electric-vehicle batteries “won’t impact fundamentals significantly in the very short term, but it’s certainly opening up a much better performance in the future.”
Nickel sulphate, a key ingredient in lithium-ion batteries, will see demand increase by half to three-million tons by 2030, Saad Rahim, chief economist at Trafigura, said in an interview. That echoes bullish views from miner and trader Glencore. Batteries are likely to use more nickel and less cobalt in future, Rahim said in an interview.
Nickel is now up 25% this year and is among the best performers on the Bloomberg Commodity Index of 22 raw materials. A growing deficit will reduce the market’s longstanding inventory overhang and support higher prices, according to Morgan Stanley. BHP Billiton, the world’s biggest mining company, has said it’s considering accelerating a nickel-sulphate expansion as battery-maker customers buy more of the metal faster than expected.