Nickel’s Tumultuous Journey in Q2 2024
The second quarter of 2024 was a roller-coaster ride for the nickel market, characterized by volatile prices and fluctuating supply-demand dynamics. This period saw several key developments shaping the trajectory of the nickel market, including macroeconomic factors, policy changes, and supply disruptions.
From a macroeconomic perspective, factors such as the global economic recovery, the U.S. inflation rate, and geopolitical tensions significantly influenced nickel prices. The bullish global economic environment, largely driven by rebounding consumption and strong industrial activity, stoked demand for base metals, including nickel. Simultaneously, higher US inflation rates led to a stronger dollar, thereby pushing commodity prices higher.
Geopolitical tensions, especially in areas that are significant contributors to the global nickel supply, also played a crucial role in the nickel market dynamics during Q2 2024. Disruptions in major nickel-producing countries, due to political instability or environmental regulations, heightened concerns over securing stable nickel supplies, thereby influencing prices.
On the supply front, the Q2 of 2024 marked several disruptions. The unexpected shutdowns at key mining facilities globally imposed a significant dent on global nickel production, exacerbating supply constraints. Additionally, stringent environmental regulations imposed in major nickel producing countries, such as Indonesia and the Philippines, further affected supply. These factors led to a tighter global nickel market, setting a floor for nickel prices.
In terms of policy, changing regulations around green energy and the automobile industry played an essential part in shaping the nickel market. With the rising adoption of Electric Vehicles (EVs), the demand for nickel has skyrocketed, given its critical use in EV batteries. Furthermore, regulatory pressure to reduce carbon footprints has been a bullish factor for nickel used in EVs and energy storage solutions.
Demand trends during the second quarter were also key to nickel price movements. The thriving stainless steel industry, a major consumer of nickel, was a significant demand-side propellant. Moreover, booming EV and renewable energy sectors continued to chip in for nickel demand. This growing demand, coupled with supply-side complexities, offered strong support to nickel prices.
However, despite these bullish factors, nickel was not immune to a few bearish pressures. Increasing production from nickel pig iron operations in China, coupled with subdued demand from some sectors due to disruptions caused by the COVID-19 pandemic, somewhat slowed the rally in nickel prices.
In terms of specific price movements, nickel started the quarter at around USD 16,000 per tonne. Prices peaked in mid-May at USD 20,000 per tonne, largely driven by acute supply concerns and robust demand. However, by the end of June, the nickel price slid back to USD 18,000 per tonne due to heightened Chinese production and fluctuating demand patterns.
Overall, nickel’s performance in Q2 2024 highlighted its position as a critical barometer for global economic health and demonstrated the metal’s sensitivity to supply-chain disruptions, policy evolutions, and surging demand from the green energy and EV sectors. As we move into the next quarter, these factors will continue to shape the metal’s market dynamics.
