Inventory drawdown is the defining narrative at the moment, and nickel is part of the story.
Economic recovery around the world is patchy. Some countries are recovering strongly, while some are still struggling. Inflation is surging and analysts are having trouble agreeing whether 2022 can see anything like 2021’s rate of growth as a result.
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But one area of near universal concern is dwindling exchange and trade inventory stock levels.
Nickel stockpiles fall
Take nickel, for example. Nickel stockpiles on the London Metal Exchange recently fell for the 51st straight day, a Financial Times post reports. Meanwhile, in China, nickel stocks in official warehouses are close to a record low at just 4,859 metric tons. Aluminum inventories are a fraction of levels held two years ago. U.S. crude inventories fell to their lowest levels since October 2018.
While the oil market is broadly in balance, both nickel and aluminum are in deficit.
According to the Financial Times, nickel registered a supply-demand deficit of around 180,000 tons last year. That is equal to approximately 6% of its total market size. Not surprisingly, nickel prices have been driven higher both by industrial metals demand and investor speculation.
Nickel demand in EVs
Stainless demand remains strong but investors are more excited by the long-awaited ramp-up in electric vehicle demand.