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Nickel prices cool as Indonesia ends export ban

After blowing past $8/lb, metal settles in closer to $7
Big Nickel

While long-term demand forecasts are still strong, nickel has given back some of the gains it has made in 2019, dropping by about US$1 a pound since peaking at $8.17 in September.

Nickel was selling for $7.06 a pound late Tuesday on the London Metal Exchange.

According to a story in the Financial Post, rising stockpiles and a decision by Indonesia to reverse its export ban are behind the drop.

“Last week, Indonesia said it had allowed some nickel ore exporters to resume shipments following a temporary halt to investigate reports of violations,” the story said.

“Nickel has been the best performer this year among base metals, with LME nickel rising 49 per cent, supported by a fear of a shortage in supplies from Indonesia, after it announced a ban on exports from the beginning of next year.”

Nickel analyst Terry Orstlan told earlier this year that short-term prices will be volatile, but long-term, demand for electric car batteries will drive prives up.

Currently, two-thirds of the world's nickel is used for stainless steel production, and three per cent for batteries. That ratio is expected to change dramatically.

“Changes in battery technology that improve the longevity and cost profile of batteries are likely to lift the proportion of nickel used in batteries, which combined with significantly higher battery production, is expected to open new opportunities for nickel producers from the 2020s onward,” said a June analysis by the Australian government.

“World consumption is forecast to increase from 2.3 million tonnes in 2018 to 2.7 million tonnes in 2021, growing at an average rate of 4.7 per cent a year.”