Historic demand trend imply continued nickel deficits
The rapid evolution in commodity consumption habits is fuelling a demand-supply disconnect in a number of commodities, underpinning a shift into deficit for nickel resulting in inventories already being drawn down to five-year lows.
Auroch believes continued inventory drawdowns will have significantly positive impact on the long-term nickel price as incentive pricing will be required to attract additional supply.
Nickel Inventory and Price
Significant demand-supply pressures are emerging with nickel inventories surpassing five-year lows and driven by a 2020 Indonesian nickel ore export ban, electric vehicle (battery) demand and limited new sources of supply.
Indonesian Nickel Ore Export Ban
In September 2019, the Indonesian Government brought forward an export ban on nickel ore exports with miners agreeing to stop nickel ore exports immediately. Indonesian ores have historically fed the Chinese nickel pig iron market, a cheaper alternative to pure nickel for the production of stainless steel.
EV Nickel Demand as % of 2018 Nickel Supply
Mobility transition is a major new source of nickel demand with 140 million electric vehicles forecasted to be on the road by 2030, representing 59% of current nickel supply.
