The price of nickel soared, marking a significant leap by over 5% amid political strife in New Caledonia that has sparked concerns over potential impacts on the island’s nickel production. This French-administered territory holds the rank as the third-largest nickel provider, particularly essential for crafting electric vehicle batteries, and was recently ensnared by intense protests ignited by modified voting legislation.
These demonstrations have impacted the operations of Eramet SA, a French mining conglomerate, resulting in its New Caledonian division throttling down to its minimum output levels.
On the London Metal Exchange, nickel prices surged to a maximum of 5.7% within a day, the most considerable increase since April 15. The metal’s price stood at $20,880 per ton in early morning trade in London, reflecting a 5.5% uplift. This bullish trend wasn’t limited to nickel alone; other fundamental metals like aluminum and copper experienced growth, each climbing 1.1%.
Previously, New Caledonia had seen a reduction in its nickel production, attributed to a dip in prices spurred by declining demand within the battery segment and a surge in Indonesian nickel output. However, a string of delays in mine licensing within Indonesia and imposed sanctions on Russian metals precipitated a resurgence in nickel prices on the LME, crossing the $20,000 per ton mark for the first time since the fall of the prior year.
Analyst Gao Yin from Horizon Insights comments that the recent fluctuations in nickel prices can be seen as an effort to align with other metals, noting that “Nickel is making up for lost ground.” Yin further observes that the unrest in New Caledonia introduces an element of unpredictability to the nickel supply chain, further fueling the uptick in market prices.
