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Industrial metals Shine

The stellar recovery in Chinahelped the base metals spectrum build its trajectory ever since the pandemic led economic fallout in the early months of 2020.China’s economic upswing resulted from the stringent lockdown in the initial phase of the virus outbreak which helped them turn things around at a faster pace.

Massive(infrastructure focused) stimulus package and soaring demand from China, Industrial metals have been surrounding the same narrative in the past months. However, the recent rally in the base metals complex is not all about China.

While many countries are still struggling to tame the lethal pandemic, demand outside China has witnessed significant growth whichstrengthened theBase metal prices across borders.Increasing bets on surge in global demandaccompanied with enormous liquidity infused by major central banks around the globe have carved a favourable outlook for the entire pack.

Nickel Steadies

LME & MCX Nickel prices are back at the levels seen earlier in January’21, recording the least gains against its peersin 2021(YTD).(LME Nickel: $17585 per tonne & MCX Nickel: Rs.1316 per kg as on 30^th April’21)

The lustrous metal had a dream run entering into 2021 as Elon Musk’sappeal to the global miner to produce more Nickel sent the prices higher.

With Electric Vehicle’s coming into the picture, the demand for Nickel is expected to proliferate due to its crucial role in the rechargeable batteries. Nickel enables a greater storage capacity and higher energy density in the batteries at a low cost which makes it very valuable for EV producers.

Investors expect the global Nickel market to witness an evident deficit in the coming years resulting from the surge in demand from the EV segment.

After posting gains of over 10 percent in the first two months of 2021, Nickel reversed its trend soon after China’s Tsingshan Holding Group, steel and Nickel producer, agreed to supply 100,000 tonnes of Nickel matte to Huayou Cobalt Co and CNGR Advanced Material Cofrom October’21, easing worries of a possible shortage.

Availability of Nickel matte, an intermediate product used in both, EV’s &Stainless-steel production,and Elon Musk announcing to shift to batteries that use Iron ore instead on Nickel for Tesla’s standard range cars prompted a sharp sell in the global Nickel pricesin the early weeks of March’21. (Nickel prices plunged over 10 percent on the LME & MCX)

However, prices seem to have steadied latelyon a promising demand outlook. Global industries vouching to curb carbon emission has kept the entire industrial metals spectrum on the dais. With the world moving towards a greener environment amid the noteworthy expansion in the Electric Vehicle segment, demand for Nickel and other industrial metals is set to multiply in the years to come.

Also, many countries making the green revolution a priority due to escalating worries over climate change improved the outlook. Traditionally strong demand from China coupled with the world trying to adapt to a low carbon environment helped all the industrial metals continue with their momentum from 2020.

Even the stainless-steel segment, which consumes over half of the global Nickel output, continued to expand following the increase in the number of infrastructural projects across borders further supporting Nickel prices. Infrastructural development was a key element of the enormous stimulus packages infused by global central banks to recover from pandemic led economic turmoil.

Robust domestic and overseas demand coupled with production restrictions in China kept prices of steel and steel related products afloat. Top steel producer, China, shutting operations at local plants which exceed the determined emission targets raised severe supply threats in the global steel market.

High steel prices lured the mills to ramp up the steel production in turn boosting appeal for its primary raw material, Nickel. Stern environmental norms in times of seasonally strong demand havecreated a bullish atmosphere for the entire pack.

Outlook