Why Nickel Pricing Remains Volatile

From the brand-new ASA Commodities Report, a free member benefit written each month by the members of the association’s Industrial Piping Division, prices corrected for nickel and all base materials since the last report.

A significant contributor to the declines was news of the bank failures and fear of further contagion. There has been a rally of sorts over the last week which provides some reason to believe a recent price bottom for nickel had been reached.

Nickel remains exceptionally volatile due mainly to the fact that trading volumes have reduced substantially in the aftermath of last March’s epic short squeeze that roiled nickel markets and the LME.  

A key catalyst to the chaotic short squeeze was the large global migration towards electric vehicles. Nickel as a key raw material for EV batteries, has been undergoing somewhat of an “identity crisis” with respect to its price drivers.

Long regarded as an industrial metal, nickel’s price direction had been significantly dictated by activity in the energy and industrial sectors. With the broad, continuing development of nickel pig iron mined from laterite ores, most of the global trading of nickel is centered on lower-grade material which is not stocked on the LME.

To address the disconnect between high-grade nickel and lower-grade nickel, the UK-based, Hong Kong-owned LME has announced plans to collaborate with QianhaI Mercantile Exchange — which is also owned by the same parent company – to launch a lower-grade contract that should bring more clarity to actual cost drivers of stainless steel PVF.

This is welcome news for our space as this development should also help mitigate the effects of speculation by financial investors focused on raw material for EV batteries. While it’s moved off its record highs, molybdenum prices look to remain elevated for the foreseeable future which will impact costs & prices of 316 material.

Prices of key alloying ingredient chromium also appear poised for near future increases in the face of power supply shortages in South Africa.