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Nickel Prices Surge To Decade High Amid Soaring Battery Demand And Ukraine Crisis

Tyler Durden's Photo
by Tyler Durden
Tuesday, Feb 22, 2022 - 09:15 AM

Nickel prices soared to the highest level in more than a decade amid skyrocketing demand for electric cars, as the Ukraine crisis added to supply concerns. 

The combination of nickel-cobalt aluminum is the chemistry behind electric car batteries. Nickel is one of the crucial metals by mass in lithium-ion battery cathodes. Rapidly increasing demand for electric cars has tightened supplies for the metal and pushed prices on the London Metal Exchange to levels not seen since 2011.

Besides rising electric car popularity, the crisis over Ukraine has been another variable of why metal prices are soaring. Russia is the world's third-largest nickel producer, and if conflict were to break out over Ukraine, global commodity flows would crumble. Western corporate media has spent the better half of the last two weeks hyping up "imminent" war propaganda as Russian President Vladimir Putin spoke with French President Emmanuel Macron for several hours on Sunday about holding a summit with the West to offer a diplomatic solution to the Ukraine crisis. However, the Kremlin said there were no "concrete plans" for a summit.

Nickel prices on Monday jumped as much as 2% to $24,610 per ton, the highest level since August 2011. Prices eased to around $24,530. So far, prices are up 18% in 2022. 

In terms of seasonality, the last time nickel prices were at these levels for this time of year, it was in the 2000s commodities boom.

Russia is a major producer of metals, as well as aluminum. Investors have fretted that supply-chain disruptions or sanctions could hit exports from the country in the event of military action in Ukraine. Aluminum prices are on the cusp of breaking out to a new high. 

Another metal that stands out is Lithium, and soaring prices have less to do with Russia but more with soaring electric car demand. Chinese prices (in USD) are up more than 50% since the end-December. 

As a reminder, the spot Bloomberg Industrial Metals Subindex continues to soar to new highs. 

What does this mean for electric car prices? It seems like Elon Musk will have more trouble creating an affordable Model 3. 

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