Investment in nickel, a crucial metal for electric cars and sustainable energy storage, is gaining traction despite recent fears of too much nickel flowing into the market. Particularly in Indonesia, this excess supply caused nickel prices to plummet. Now, with signs of a rebound, investors might find opportunities in nickel companies whose stock values have hit lows.
In the early months of the year, nickel prices began to climb up from a dip, reaching over $19,000 per ton after having fallen to $15,700. This price is still a sharp drop from the high of over $48,200 seen in April 2022, yet the recent increase suggests a stabilizing market which could point to potential growth.
The market’s uptick is credited to two key factors: the push towards sustainable practices and doubts about the alleged surplus of nickel. Despite the abundance of nickel, especially the lower-cost, higher-pollution nickel from Indonesia, there’s still a strong demand for cleaner options that align with climate action plans. This shift is shaping where investors put their money.
For long-term profits, traceability in nickel sourcing is becoming essential. This trend mirrors the cobalt industry, where origins of the raw materials are crucial to investors, consumers, and governments. Nickel mining companies that can prove where their nickel comes from will likely be the most successful.
Concerns have been raised over Indonesia’s nickel production surge, which has been attributed mostly to Chinese-based mining companies. This rapid increase has raised eyebrows among Western leaders, suggesting that such a flood in the market could unfairly affect Western miners.
Nonetheless, an industry expert with over four decades of experience has indicated that actual nickel stockpiles might be much smaller than reported, hinting at a quicker than expected market correction.
Looking ahead, agencies such as the International Energy Agency forecast a potential nickel shortage as the decade progresses due to the growing demand from green technology developers. This underscores the need for continued mining development in regions outside of Indonesia.
With all this in mind, investors might need to look closely at where their nickel comes from, tapping into sources that support a greener future. As Indonesia continues to impact the global commodities stage, the significance of clean and traceable nickel cannot be understated in meeting both environmental standards and market demand.
