Nickel Rallies Most in Five Years on Promise of Electric Cars

(Bloomberg) -- The nickel market has caught fire, with prices posting the biggest two-day advance in five years.

Nickel rose as much as 6 percent to $13,030 a metric ton on the London Metal Exchange, the highest since June 2015. That added to Tuesday’s 5.3 percent gain after Trafigura Group Pte joined Glencore Plc in unveiling bullish usage forecasts. In Shanghai, prices climbed by the daily limit.

"Such breakthrough has been cooking long, backed by relative value and EVs," Richard Fu, head of Asia Pacific at Amalgamated Metal Trading Ltd., said by email.

Nickel sulphate, a key ingredient in lithium-ion batteries, will see demand increase by half to 3 million tons by 2030, Saad Rahim, chief economist at Trafigura, said in an interview. That echoes bullish views from miner and trader Glencore. Batteries are likely to use more nickel and less cobalt in future, Rahim said.

Nickel is now up 28 percent for 2017, vying with aluminum for the title of top base metal of the year.

Chinese investors piled into Shanghai futures at the start of morning session, and prices were locked up by the limit just short of 100,000 yuan a ton, the highest intraday level since November.

MMC Norilsk Nickel PJSC, which competes with Vale SA as the world’s top nickel producer, has warned that the market may have become too bullish too quickly. The company sees this year’s nickel demand from batteries at about 65,000 tons, compared with total usage of 2 million tons, according to Anton Berlin, head of analysis and market development. It will take a few years for EVs to become a significant consumer, he said.

In other metals:

• Other base metals also rallied
  • Copper advanced 1.3 percent to $6,930 a ton.
  • Aluminum, lead and tin also rose 
  • LME zinc stockpiles fell by the most since mid-July.

--With assistance from Kevin Crowley and Luzi Ann Javier

To contact the reporters on this story: Yuliya Fedorinova in Moscow at yfedorinova@bloomberg.net, Martin Ritchie in Shanghai at mritchie14@bloomberg.net.

To contact the editors responsible for this story: Jason Rogers at jrogers73@bloomberg.net, Lynn Thomasson, Tony Barrett

©2017 Bloomberg L.P.