Nickel price is stabilising but a rebound might not happen soon

Nickel prices are hovering near their lowest level since 2021 as investors focus on the ongoing demand and supply mismatch. According to TradingView, the price of nickel was trading at $16,547 on Wednesday, a few points above last year’s low of $15,843. It has tumbled by almost 50% from its highest point in 2023. 

Nickel, cobalt, and lithium prices are plunging

Nickel is not the only battery metal that is recoiling. Lithium, an important part of batteries, has dropped by over 80% in the past 12 months to $13,200 per ton. It has dropped to its lowest level since 2020. Similarly, cobalt price has also tumbled to $29,135 from a high of almost $50,000 in 2023. 

This price crash has coincided with a period of high production by companies like BHP and Glencore as they rush to take advantage of the energy transition. Most nickel-producing countries like Indonesia, the Philippines, and Russia have all boosted production in the past few years. 

China, in particular, has been highly aggressive in buying mining operations around the world. It now owns mines and its factories have become excellent in refining these metals. In the aftermath, as it did with steel, China is now saturating the market with these battery metals.

The implication of low nickel, cobalt, and lithium prices is that the cost of batteries is expected to continue falling. Indeed, a recent report by Goldman Sachs noted that EV battery prices were plummeting at a faster pace than expected. This drop is important because batteries are the most important parts of EVs.

Indeed, most EV companies, including Tesla and BYD have slashed prices sharply in the past 12 months in a bid to stimulate growth. However, there are signs that this is not working as most of them are reporting weak sales growth. Tesla’s revenue growth came in at just 3% in 2023.

Demand and supply mismatch

Therefore, nickel price is falling because of robust supplies and weak demand for EVs. Still, there is a potential catalyst in the future since many companies are now considering shutting mines or lowering production. BHP recently announced that it will write off its nickel business.

As we have seen with coal and crude oil prices, a reduction in investments and production could lead to higher prices. But this change of trend takes time to achieve. Therefore, in the near term, analysts believe that the price of nickel will remain under considerable pressure.

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