Commodity: nickel

Nickel is a chemical element and a transition metal. It is mostly used for high-grade steel manufacturing, and increasingly so, in batteries. Owing to its corrosion resistance, durability, and abundance in availability, stainless steel is used in various sectors, including food and beverage, construction, aerospace, transport, medical, chemical, etc. The major countries in nickel mining include Indonesia, Philippines, Russia, and New Caledonia. Indonesia is also the country with the largest reserves of nickel, followed by Australia and Brazil. Interestingly, nickel reserves are among the metals and minerals with the least remaining life years, however, because nickel is a highly recyclable material, this poses less of a problem.

The surge that peaked on July 24 at a two-month high of $15,640 due to plentiful supply and the Chinese government's efforts to reduce industrial capacity, which limited demand for nickel as industrial alloys, was erased when nickel futures dropped below the $15,200 per tonne line. Beijing escalated its rhetoric by limiting the production of finished steel, lowering steel mill capacity, and limiting the bidding for nickel in the production of stainless steel. Meanwhile, in line with strong Chinese refiners in Indonesia, accessible nickel stockpiles at LME warehouses increased by 40,000 tonnes this year to 190,000. The Indonesian government reduced nickel mining quotas by 120 million tons to 150 million this year, cutting global supply by 35% from current levels, although soft bidding prices throughout the year indicated that markets don't see constraints dampening the oversupplied backdrop.

In the medium term, the growth of the nickel market can be driven by the increasing demand for nickel in stainless steel alloys. Today, about two-thirds of the nickel sold annually is used for stainless steel. In addition, growing demand for nickel in automotive batteries, energy storage systems in wind turbines or lower cost solar panels is a key driver of market growth. Asia-Pacific accounts for a large share of nickel consumption. This is mainly due to the presence of large stainless steel companies and battery manufacturers. Additionally, increased nickel consumption in Electric Vehicles (EVs) is also expected to boost the market in the region, as it accounts for a significant portion of nickel demand.