On November 14, 2022, Ni price was 28,767 US dollars per metric ton at LME (London Metal Exchange).
Nickel is the highest-priced metal that is actively traded on the LME. The jump in the dollar and borrowing costs have left lenders rushing to unload positions that are becoming more costly to hold, according to several traders involved in the market and Bloomberg.com. “The reality of the situation is that banks have been sitting on metals to finance, and nickel is one of the more expensive metals to hold. ” “You can see from the moves in the spreads that this is a risk-reduction event, and any bank that’s active in financing will have been involved” stated one of the commodities sales executives at Marex.
We believe that the main driver of the plunging spread over the past week has been selling on the part of banks who’ve held nearby positions as hedges against long-term sales to carmakers, who use nickel in electric-vehicle batteries.
FYI, per Bloomberg.com Volkswagen AG has been particularly active in hedging its exposure to nickel prices, covering a portion of its requirements up to nine years ahead. That’s made it one of the largest holders of long positions in London nickel contracts, and it reaped a $3.8 billion windfall on those and other commodity positions earlier this year as prices surged.
But prices have since slid, with fears over curbs on Russian supply giving way to worries about a worsening demand outlook. Benchmark three-month prices fell 0.6% after earlier dropping as much as 1.2% to $21,950 a ton on Tuesday — compared with a peak of $55,000 during the March squeeze.
Goldman Sachs Group Inc. analysts including Nicholas Snowdon see close to 30% downside for the nickel price into year-end. They also downgraded their forecast for nickel prices in the next six and twelve months to $18,000 and $20,000, respectively, from previous projections of $30,000 and $28,000, respectively. Their new 2022 and 2023 average price forecast is now $24,300 and $18,500, respectively.
FYI, the biggest producers of nickel are Indonesia, the Philippines, Russia, New Caledonia, Australia, Canada, Brazil, China, and Cuba.
Nickel is mainly used in the production of stainless steel and other alloys and can be found in food preparation equipment, mobile phones, medical equipment, transport, buildings, power generation.94
