A surge in the price of nickel has been mainly caused by the increasing demands of storing energy in batteries of most everyday items.
Indonesia produces the most nickel of any country, producing 560,000 metric tonnes in 2018 according to the US Geological Survey. The value of nickel has jumped by 69 percent since the start of the year when it was trading at Rp149,808,010 or US$10,604.
Eighty percent of the world’s nickel is used to make stainless steel for pipes and household items like fridges. According to Ausbil Global Resources Fund portfolio manager, James Stewart, about 3 percent goes into electric vehicle batteries; it’s a vital component in electric vehicles and the battery unit. Electric vehicle battery makers are currently increasing their use of the metal to boost their power capacity.
Supply fears came to the fore last month after Indonesia announced it would ban nickel exports from 2020 as it develops its own electric battery industry backed by Chinese stainless steel giant Tsingshan Group. That statement led to prices hitting a five-year peak of Rp256,456,507, or US$8,153, or per metric tonne.
However, prices could be set to rise again with stocks on the London Metal Exchange sitting at a six-year low, down 40 percent since the start of October, ahead of the Indonesian export ban.
Investment firm Paradigm Capital said in a research note that “current inventories are enough to cover roughly one week of consumption, which we characterise as critically tight.”
The demand for electric vehicles and storage batteries has added fuel to nickel’s fire with once-mothballed mines set to reopen. Commonwealth Bank commodities strategist, Vivek Dhar, said that this could lead to a supply shortage in the near future. However, Indonesia’s plans to develop an electric battery industry are not guaranteed because of its lower grade nickel supply which is more expensive to process into battery-grade material.