Nickel & stainless steel: supply worries drive prices higher

In anticipation of global nickel supply disruptions resulting from the Russian invasion of Ukraine, primary nickel prices hit the highest levels seen in a decade in late February 2022. At the London Metal Exchange, nickel cash prices traded above US$ 26 000 per tonne following the invasion, the highest level since 2011.

With nickel and other stainless steel raw material inputs already in short supply – nickel stocks in LME warehouses have declined by more than two-thirds since early 2021 – stainless steel and scrap prices could be pressured higher amid growing stainless demand.     

According to estimates from Fastmarkets MB, global nickel demand exceeded supply by demand by 155 000 tonnes in 2021 and is forecast to record a supply deficit of 93 000 tonnes in 2022. At the same time, nickel stocks in LME warehouses have dropped from more than 260 000 tonnes in the first quarter of 2021 to just over 80 000 in February 2022.

The decline in primary nickel availability has been accompanied by strong demand growth from both the stainless steel and electric vehicle battery markets over the last year. Macquarie Research estimates global electric vehicle sales increased 102% in 2021 ‘as sales soared towards the end of the year in China and Europe’.