After the spike to a three-year high of $16,690 per tonne in April, at the height of the markets panic about the possibility of US sanctions impacting Rusal and potentially affecting Nornickel too, nickel prices naturally retreated into the $13,000s to consolidate.
But they have rallied again in May into the high $14,000s, attempting to retest the $15,000 per tonne level. What is driving this rally is bullishness about the electric vehicle (EV) revolution at LME Week Asia. This is somewhat reminiscent of the EV excitement that engulfed nickel around the time of LME Week in London last October.
This is still a long-term story, but it continues to capture the imagination of traders. The current fundamentals should not be overlooked though, because these look bullish too, with the global market facing its third consecutive year of supply deficit and exchange stocks already down by almost 70,000 tonnes this year. After a bullish upgrade at the start of the quarter, our Q2 nickel price forecast is $14,260 per tonne.
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