Could nickel pundits be wrong about the expected bull run for the industrial metal in 2020?

Before December, all the signs were positive. London Metals Exchange (LME) nickel prices had hit a five-year high of $US18,850 ($27,200) per tonne after Indonesia confirmed the early ore export ban, while inventories fell to their lowest level since 2012.

S&P Global forecast that while nickel prices had come off its September highs, it expected the metal to average $US16,500 per tonne in 2020.

Fast forward to the beginning of 2020 and nickel inventory levels have doubled from 68,982 tonnes on 2 December 2019 to 150,690 tonnes on 30 December.

The LME three-month price also fell back below $US14,000 per tonne in late December, early January.

LME nickel prices over the past 12 months.

While nickel bulls believe the real growth for nickel will come from its use in rechargeable batteries for electric vehicles (EV), it is still uncertain when this growth will kick in.

China’s Ministry of Industry & Information Technology is aiming for a quarter of all cars sold in the country to be EVs by 2025.

However, Metallbulletin quoted ED&F Man analyst Edward Meir as estimating that EV market uptake would rise by just 5 percentage points to make up 9 per cent of global vehicle sales by 2022.

This suggests that it would take significant time before there is significant nickel demand to come from the EV battery sector.

Additionally, market research and consultancy firm Beijing Antaike Information expects Chinese stainless steel output growth to slow to just 3.4 per cent in 2020, down from a 9.4 per cent year on year growth in 2019.

There are also concerns that Chinese stainless steel production could even decline given that it has been operating at a loss since November 2019.

Argonaut mining and energy research director Matthew Keane provided further support for nickel having a lacklustre year, telling the New World Metals Conference in December that a price recovery would be “a bit more prolonged”.

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