The Oregon Group Predicts up to 5-year Battery Nickel Supply Crunch
TORONTO, Feb. 21, 2023 /PRNewswire/ - The supply of Class I nickel, essential for electric vehicle batteries, is expected to face a shortage for the next three to five years, according to a new report. The Oregon Group predicts a continued crunch in the nickel market despite increased production by Chinese nickel giant, Tsingshan.
The report examines key trends affecting the growth of Class I nickel supply and demand. These include geopolitical tensions, and the coming clash between the pressure to decarbonize supply chains and the high emissions of new and near-term nickel production.
Nickel market trends have become hard for many observers to predict. The London Metals Exchange (LME) crash, in March 2022, the canceled trades that followed, and the withdrawal of numerous banks, put an end to the Exchange's liquidity. Nickel prices are now so volatile that they are no longer representative of nickel's market value. In addition, the market has been rocked twice in the last two years as Tsingshan and other Chinese players have moved aggressively to increase Class I production.
However, the moves by Western countries, including the US and Canada, to strengthen domestic battery metal supply chains, along with the delays related to Tsingshan's new Class I nickel supply, are on track to have two major impacts: the current Class I supply shortage will be extended, and domestic nickel supply in the West will be boosted. In addition, while the carbon border taxes envisaged by the EU and elsewhere do not yet include nickel, the threat to high carbon emission nickel is strong and growing stronger.
Overall, these trends will benefit a number of players in the nickel market. Existing producers like Glencore (LSE: GLEN), BHP (NYSE:BHP), and Vale (NYSE:VALE) have the potential to see continued strong profits from their nickel production. Large development plays like Gigametals (TSXV:GIGA), FPX (TSXV:FPX) and Canada Nickel (TSXV:CNC) are well positioned to benefit when they raise the funds for construction.
ETFs and ETNs, such as the iPath Series B Bloomberg Nickel Subindex Total Return ETN (NYSE:JJN), Global X Nickel Miners ETF (NYSE:NICK), and VanEck Green Metals ETF (NYSE:GMET) are directly linked to the price of nickel and will see strong value in a higher priced nickel market.
Nickel is one of the most versatile metals in existence. It is an irreplaceable component of stainless steel, which still accounts for the bulk of nickel demand, and also makes up anywhere from 30% to 80% of modern lithium ion batteries. Stainless steel and alloy producers can utilize low-quality nickel (Class II nickel) but superalloy and battery producers require nearly flawless levels of purity - a minimum of 99.8% (Class I nickel).
The shortage of Class I supply seen in the current market is because economic nickel deposits are becoming hard to find, and economic nickel deposits that are high-grade and suitable for low-emission refining into Class I product are now exceedingly rare.
To learn more about the nickel market, key trends, and players, you can access The Oregon Group's new report, entitled "The Green Economy and Nickel's Generational Class I Supply Crunch" by visiting our dedicated website section for the nickel market report.
The Oregon Group is an investment research company founded by independent capital markets experts, Anthony Milewski and Justin Cochrane. The company is focused on a variety of key investment trends related to commodities and energy transition.
For more information, please visit theoregongroup.com
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SOURCE The Oregon Group