London Metal Exchange (LME) three-month nickel hit a seven-year high of $20,225 per tonne on Thursday morning and has a new-found spring in its step after collapsing in February.
That is when Chinese steel group Tsingshan announced its Indonesian nickel operations would supply matte - a form of the metal used only for stainless steel production - to battery makers. That undercut a collective bet that only refined nickel would be sufficiently high grade for the electric vehicle sector.
Bull spirits were rudely doused and nickel was the under-performer of the LME base metal pack until June, but has now clawed back all of its losses and a little bit more.
LME time-spreads have shifted to backwardation and registered inventory is flying out the warehouse door.
The metal is almost certainly heading to China, where a short squeeze is playing out on the Shanghai Futures Exchange (ShFE).
China is also looking physically short of nickel, with imports booming across the product spectrum. A market that has been obsessed by supply has been caught out by the strength of demand.
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