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Nickel prices in Shanghai hit a new record on Tuesday, supported by solid demand from industrial sectors and low inventories worldwide.
October’s most-traded nickel contract on the Shanghai Futures Exchange hit a record 149,870 yuan ($23,197) a tonne, up 21% year-on-year. Three-month nickel on the London Metal Exchange also hit its highest since July 30 at $19,810 a tonne, having risen 17 percent so far this year.
Orders for stainless steel products extended through the end of the year, mainly due to a strong rebound in post-lockdown demand and the covid-19-related distribution disruption.
Shipment delays forced consumers to place orders much earlier than necessary. At the same time, the expansion of the electric vehicle (EV) fleet is supporting a near-doubling of nickel precursor chemical production in China, with global nickel demand up nearly 18% in 2021 compared to last year.
Stainless steel and EV batteries are the main nickel-consuming sectors.
On the supply side, refined nickel stocks in ShFE warehouses reached a record low of 4,455 tonnes, down 89% year-on-year. Stocks in LME warehouses also fell to their lowest since January 2020 at 194,466 tonnes.
However, nickel could face renewed turbulence for the final part of the year due to calls to cut stainless steel production in China over oversupply and energy rationing at a time when macroeconomic data is subdued.
A wave of cuts in the automotive sector due to semiconductor chip shortages will likely reduce nickel demand in the fourth quarter and extend into 2022.
