Nickel prices have plummeted more than 20 per cent in four months, taking ASX nickel stocks with them — but experts expect a turn-around in 2019.

Nickel hit a two-and-a-half year high of $US15,575 in June and is now trading at $US12,542.

Only a handful of ASX nickel stocks have made gains since June — many have suffered double digit losses (see table below).

But in spite of the price drop, more nickel is being consumed than produced.

Nickel LME warehouse stocks have continued to fall steadily. Over the past 12 months, nickel stores have dropped from 387,948 tonnes to 228,564 tonnes on September 28.

Most nickel supply is used in the production of stainless steel, but demand for high-grade nickel from the small but growing lithium-ion battery market is increasing.

Here’s a graph showing the price of nickel over the past year:

Nickel prices (USD) over the past year.Nickel prices (USD) over the past year.
Nickel prices (USD) over the past year.

Wood Mackenzie analyst Andrew Mitchell expects nickel prices to stay about where they are for the remainder of the year, before increasing slightly in 2019.

The  trade war between the US and China hasn’t helped pricing at all in the second half of the year – prior to that, nickel demand looked like it would pick up nicely.

“There were [supply] deficits in the market, and everyone was getting quite excited about that scenario,” he said.

“The trade war has given that [momentum] a real kicking in the interim.

“Our outlook for the reminder of the year is for prices to stay about where they are – our average for the year is $US13,400/ tonne.”

Wood Mackenzie also see a modest rise in price next year to about $US14,500/t, and then going forward, prices increasing further as EV demand takes hold.

Demand from battery makers for nickel is already increasing – and increasing significantly – albeit from a modest base, Mr Mitchell said.

“That is going to grow much more strongly going forward, but where the tipping point actually occurs is still open for debate,” he said.

“We have it at 2026 or 2027, where the price of batteries become truly competitive.”

Nickel-rich batteries could put a huge dent in supply

The next generation of high nickel, low cobalt NCM batteries for EV could significantly increase nickel demand – and the supply could struggle to keep up.

“While there is still a lot of work to be done around NCMs, they have the potential to significantly increase the demand for nickel in EV vehicles,” Mr Mitchell said.

“Whether the market can keep up with that demand looks questionable at the moment.

“We aren’t saying it’s impossible, but it is going to be a challenge.”

But a couple of recently announced Indonesian projects could effectively wipe off those deficits if they come to fruition, Mr Mitchell said.

Last week, companies led by Chinese battery maker GEM announced a $US700 million project to produce 50,000 tonnes per annum of battery-grade nickel.

“We do see rising nickel prices in the market going forward, but this is based on predicted supply deficits,” Mr Mitchell said.

“We are coming to a view that the current deficits we show will be eroded somewhat by virtue of developments in Indonesia (in particular).”

Nickel players confident in the future

Cassini Resources managing director Richard Bevan agrees that the noise around US-China trade tariffs have impacted on commodity prices – and share prices – but most producers are confident about the medium-to-long term outlook.

Cassini’s flagship West Musgrave Project hosts more than 1 million tonnes of contained nickel and 2 million tonnes of contained copper — making it the largest undeveloped nickel–copper project in Australia.

“The fundamentals for nickel are still good – stockpiles are decreasing and there seems to be a broad acceptance that the nickel market is currently in deficit, due to the demand for stainless steel,” he said.

“And a lot of demand is expected to kick in about 2022 to 2025 from the EV market.

“The fundamentals are really good. A lot of the stuff at the moment is just short-term noise.”

West Musgrave is currently undergoing feasibility studies, which means there is already a high level of interest from a number of Chinese off-takers looking to secure product.

“That is fairly common, because most of the Chinese end users have a longer-term vision — they are looking to secure long term contracts for product,” Mr Bevan said.

“Many Asian and other offshore investors take a longer-term view when making investment decisions – they are trying to position themselves for the next 10 to 20 years.”

Here’s a selection of 50 ASX stocks with exposure to nickel:

Swipe or scroll for full table. Click headings to sort. Best viewed on a laptop or desktop

ASX code Company Change since nickel price peak Jun 1 One-year price change Price Oct 2 (intraday) Market Cap
ADY ADMIRALTY RESOUR 0.153846153846 0.875 0.015 17.3M
AGS ALLIANCE RESOURC 0.32183908046 0.369047619048 0.115 11.5M
AXE ARCHER EXPLORATI -0.241666666667 0.568965517241 0.091 17.9M
ARL ARDEA RESOURCES -0.34 -0.232558139535 0.66 69.8M
AKM ASPIRE MINING 0.210526315789 0.352941176471 0.023 62.6M
ANW AUS TIN MINING L 0.375 1.75 0.022 41.5M
AQD AUSQUEST 0.0769230769231 0.647058823529 0.028 13.7M
AUZ AUSTRALIAN MINES -0.515789473684 1.875 0.046 119.5M
AVQ AXIOM MINING -0.310344827586 -0.565217391304 0.1 46.0M
BHP BHP BILLITON 0.0476118500605 0.354769351056 34.655 174.8B
CZI CASSINI RESOURCE 0.0746268656716 0.0285714285714 0.072 24.9M
CLQ CLEAN TEQ HOLDIN -0.415458937198 -0.38578680203 0.605 473.3M
CZN CORAZON MINING L -0.363636363636 -0.695652173913 0.007 8.9M
CXX CRADLE RESOURCES -0.0352941176471 -0.316666666667 0.082 15.2M
GMD GENESIS MINERALS -0.0526315789474 0.333333333333 0.036 32.8M
GME GME RESOURCES -0.285714285714 0.408450704225 0.1 48.2M
GTE GREAT WESTERN EX -0.5 -0.538461538462 0.006 6.4M
HNR HANNANS -0.0666666666667 0.166666666667 0.014 25.7M
HIG HIGHLANDS PAC -0.228571428571 0.714285714286 0.108 120.2M
IPT IMPACT MINERALS 0 -0.454545454545 0.012 15.9M
IGO INDEPENDENCE GRP -0.0865191146881 0.355223880597 4.54 2.8B
JRV JERVOIS MINING -0.239436619718 0 0.27 63.6M
KNL KIBARAN RESOURCE 0.354838709677 0.105263157895 0.21 62.0M
KOR KORAB RESOURCES -0.0882352941176 0.55 0.031 9.7M
LML LINCOLN MINERALS -0.583333333333 -0.75 0.01 4.6M
LSR LODESTAR MINERAL -0.178571428571 1.09090909091 0.023 18.7M
MAU MAGNETIC RESOURC -0.225806451613 -0.466666666667 0.12 31.5M
MLM METALLICA MINRAL -0.340425531915 -0.474576271186 0.031 10.6M
MLX METALS X -0.333333333333 -0.278481012658 0.57 406.5M
MEI METEORIC RESOURC -0.441176470588 -0.604166666667 0.019 10.3M
MCR MINCOR RESOURCES -0.166666666667 0.388888888889 0.375 83.7M
MGV MUSGRAVE MINERAL -0.0833333333333 0 0.066 21.6M
PAN PANORAMIC RESOUR -0.0431034482759 0.996402877698 0.555 272.0M
PEK PEAK RESOURCES L -0.219512195122 -0.135135135135 0.032 25.6M
PNN PEPINNINI LITHIU -0.681818181818 -0.5625 0.007 5.0M
POS POSEIDON NICKEL -0.0181818181818 1.25 0.054 140.1M
RDM RED METAL 0 -0.323529411765 0.115 23.1M
RVR RED RIVER RESOUR -0.248275862069 -0.177358490566 0.218 107.8M
RMI RESOURCE MINING 0.285714285714 0.125 0.009 2.7M
RIO RIO TINTO -0.0548484848485 0.191003513059 77.975 123.2B
SCI SILVER CITY MINE -0.375 0.0416666666667 0.025 6.2M
SAU SOUTHERN GOLD -0.320754716981 -0.389830508475 0.18 8.5M
SPI SPITFIRE MATERIA -0.285714285714 -0.333333333333 0.07 37.2M
SGQ ST GEORGE MINING 0 0.142857142857 0.12 35.8M
TAS TASMAN RESOURCES -0.172413793103 -0.644444444444 0.048 21.9M
VRX VENTNOR RESOURCE 0.0333333333333 10.0714285714 0.155 63.8M
VMS VENTURE MINERALS -0.233333333333 0.0454545454545 0.023 13.0M
WSA WESTERN AREAS -0.226495726496 0.086 2.715 741.1M
WCN WHITE CLIFF MINE -0.813333333333 -0.883817427386 0.028 2.1M
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