Surprise Nickel Price Rally: Riding High or Set to Plummet?

Nickel prices on the European commodity exchange LME surged to over US$17,000 per metric ton last week. Data shows that nickel prices for the three-month contract briefly reached US$17,500 per metric ton last Friday, marking the highest level since November 2023. The metal, utilized in stainless steel and electric vehicle batteries, closed with a significant 6.96 percent weekly gain.

This increase comes amid the expansion of Western sanctions against Russia, prompting investors to hedge against lower metal prices. Russia, a major producer of refined nickel and aluminum, faces intensified sanctions following its invasion of Ukraine two years ago. US President Joe Biden announced more than 500 new sanctions against Russia, although the details of the new list have not been disclosed yet.

"It's all about the sanctions risks. Everyone was incredibly short on nickel, so the potential risk to supply [from Russia] caused this reaction," noted Dan Smith at Amalgamated Metal Trading, as cited by Reuters. Additionally, nickel prices were reportedly buoyed by speculation surrounding the slow approval of Indonesian mining quotas, which could lead to a tightening of the nickel supply.