Here is a chart of Nickel prices (chart taken from TradingEconomics.com).
Cyclical? No question about it.
Back in 2007, Nickel prices surged higher to the $50,000 per tonne level. The driver - China was rapidly expanding its hungry economy and the feeling was that the world was headed towards Nickel shortages. The ensuing global financial crisis in 2008 put an end to any thoughts of Nickel shortages.
And…then came the electric vehicle with its poster boy Elon Musk. Suddenly electric vehicles were the answer to all the planet’s woes. Government leaders started dictating that automakers had to switch to producing all EV’s by 2030. The scramble was on for the necessary metals to make the cathodes in lithium-ion batteries that would power EVs. Nickel prices tripled from $10,000 to just over $30,000 per tonne by 2022. Along the way, China entered the fray and made friends with the Indonesian government so as to capitalize on the Nickel laterite deposits in Indonesia. Once again, fear started to mount that Nickel supplies would run low as the world shifted to EVs.
More recently, the story has changed again. China is feeling the heat from its faltering (over-built) real estate market, its strained banking system, from US-imposed tariffs on certain exports, and from its belligerent stand on Taiwan. The Chinese consumer has pulled back on purchases of goods, including EVs. Less demand for batteries means a softening price for battery-type metals.
Meanwhile, neighboring Russia is thought to be selling off large amounts of refined Nickel to raise money to pay for its aggression tactics in Ukraine and elsewhere. This is placing downward pressure on prices.
My point in all of this is - Nickel is a cyclical metal. The ups and downs visible on the above price chart clearly show this cyclicality.
So what does an investor do? How does one identify these cycles? How does one anticipate a good time to focus attention on the Nickel market?
Let’s take a more mathematical look at Nickel cyclicality.
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