Like bare feet on beach sand, the nickel price is running hot.

At just under $US11,600 per tonne, the cash price of nickel is currently just off 10-week highs as stockpiles fall to fresh lows.

After hitting $US15,600/t in mid-2018 – a three-year high –  a number of huge Indonesian nickel smelter projects were announced, stoking oversupply fears and pushing down prices.

There are widespread concerns that all this declared nickel tonnage could come to market equally quickly, and as early as the second half of 2019, but global metals and mining research and consultancy group Wood Mackenzie is not convinced.

“Our view is that the timelines will be longer than implied so that the amount of nickel coming to the market will be smaller, slower and more costly than so far alluded to,” it said in a recent note.

“This should be reassuring to the market.

“In fact, a consequent absence of commissioning news in the second half of 2019 should support higher prices.”

So far, so good:


The nickel price over the past 12 months.
The nickel price over the past 12 months.

And despite these oversupply fears, Reuters reports that official LME nickel inventories fell 44 per cent in 2018, and just recently fell through the 200,000-tonne mark for the first time since 2013.

This often means more nickel is being consumed than produced.

It represents a mini reversal of fortunes, and pares some of the losses suffered over the second half of 2018.

The question right now is, how long can the run last?

Macquarie Bank has already forecast nickel will be the number one commodity in the next 12 months, and number two (behind uranium) over the next 5 years.