The price of nickel on international markets continued its dizzying climb Wednesday, breaking past US$8 a pound before settling in at US$8.17 late in the day.
It's a surge Terry Ortslan, a nickel analyst at TSO and Associates in Montreal, saw coming in late 2018, when the metal was struggling to hit $5.
A few factors were depressing prices at the time, Ortslan said, while predicting a rebound into 2019.
“We all know batteries for electric vehicles are going to be very important new demand source of nickel, as much as stainless steel was 50 or 60 years ago," he said at the time. "So it's going to be slow times for the next couple of months, but it's a short-term issue.
"But for the battery-grade nickel that both Vale and Glencore produce, there's no problem. I think there's going to be a great market for it. I'd be really surprised if, once we go through this uncertainty over the next three or four months, nickel prices aren't back in the saddle again."
On Wednesday, Ortslan said fears of supply shortages – especially after Indonesia banned nickel exports – are driving prices right now.
“The supply side is dominating the market trend,” he said in an email. “The demand side is strong but the impact of electric vehicles are still some time away.”
But there hasn't been much investment in new supply, he said, and that's causing fears in the marketplace.
“The underinvestment into the nickel industry will be catching up with higher prices,” Ortslan said. “The industry needs a steady $8-$10 a pound of nickel for brownfield and greenfield investment considerations.”
In Sudbury, Glencore declined comment on rising prices, but Angie Robson, Vale's director of corporate affairs and sustainability, North Atlantic operations and Asian refineries, said higher nickel prices is always good news.
“While we don’t comment on the market, I can tell you that we continue to work very hard to be a sustainable producer that is competitive in all price cycles – both high and low, especially given the cyclical nature of our business,” Robson said in an email. “With respect to our local operations, we continue to invest in increased exploration, in mine expansions such as Copper Cliff Mine, and in new projects such as our joint feasibility study with Glencore on our Victor deposit.”
The company is always looking for ways to be profitable regardless of price fluctuations, she said, with an eye on long-term goals.
“We are also continuing on our journey to digitize our mines to become a safer and more reliable operation,” Robson said. “While we certainly welcome the higher prices, we intend to continue mining in Sudbury for many years to come and won’t rely on favourable prices alone for our long-term success.”
Favourable prices are expected to continue – late Wednesday, Goldman Sachs revised its price forecast, predicting nickel would rise to US$11 a pound before the end of the year.