Nickel price forecast revised up as speculative rally boosts tight market — report

Nickel for stainless steel. Image courtesy of Vale SA

Analysts at Fitch Solutions are revising up their nickel price forecast for 2019 to $13,550/tonne from an average of $13,250/tonne previously, as prices have experienced a strong speculative rally over July and August.  

While Fitch analysts believe the rally is now overdone and expect prices to average lower from spot levels in the short term, they say tight fundamentals will maintain prices elevated over the remainder of the year.

“Nickel prices rallied over 34% from the beginning of July, mainly on the back of a flurry of speculative activity spurred by supplyside fears in Indonesia and the metal’s ongoing allure as a key component of electric vehicle batteries,” the report reads.

On July 8, comments at a parliamentary hearing made by the Indonesian energy and minerals resources minister, Bambang Gatot Ariyono, reaffirmed the country’s 2014 commitment to ban the export of unprocessed minerals, including nickel, by 2022.

As the largest nickel ore producer in the world, a halt in Indonesian ore exports could lead to a significant tightening of the nickel market, which prompted investors to take up long positions in the expectation that prices will inevitably head higher over the coming years as the export ban approaches, Fitch forecasts.

In the longer term, Fitch analysts maintain nickel prices will remain on a gradual uptrend over 2020-2022, as the global market remains in a deficit during that period.

Read the full report here.  

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