Nickel prices have been on a rollercoaster ride over the past six months, surging to as high as $US18,000 a tonne in late July before falling back to around $US13,000 a tonne late last year, largely reflecting uncertainty over the impact of Indonesian supply.
Prices have stabilised in the early parts of 2020 with 3-month futures on the London Metals Exchange holding near $US13,800 a tonne on Tuesday.
Morgan Stanley’s commodity strategy team expects the recent price trends will persist over the first half of this year.
“The nickel price is struggling to resist twin bear signals of rising exchange inventory and weak demand,” the investment bank told clients earlier this week. “Over 100 kilotonnes of metal has been delivered onto exchange since the beginning of December, taking global stocks back above 5 weeks’ consumption. This is also the time when many stainless mills undergo maintenance, quelling demand, and delaying the impact of Indonesia’s ban on ore exports, which came into force with the New Year.”
Morgan Stanley sees a balanced nickel market this year but expects that will transition towards a “persistent deficit” from 2021.