As the global economic outlook continues to improve, the unmissable overarching theme at this year’s Diggers & Dealers has been nickel’s turnaround, with most analysts, miners and explorers alike believing the commodity’s upturn has only just begun.
Panoramic Resources (ASX: PAN) managing director Peter Harold told Small Caps he noticed the nickel market had “tightened materially” throughout the first half of this year, underpinned by slipping London Metals Exchange stockpiles, which have dropped from more than 350,000t to about 250,000t.
“The fundamentals for nickel look excellent going forward,” he said.
“On the demand side, stainless steel consumption is growing year-on-year and demand for nickel sulphate in electric vehicle batteries is forecast to grow strongly.”
Mr Harold added the supply/demand deficit for nickel this year was anticipated to hit a “record” 200,000t or more.
“Further deficits are forecast for the foreseeable future,” he noted.
“While the current trade war rhetoric has had a negative impact on all base metal prices over the past few months the nickel fundamentals are unchanged. I have seen nickel price forecasts of between US$8-10/lb for 2019-2021, which would seem plausible if the supply deficits continue.”
Deutsche Bank has predicted nickel will end 2018 at around US$7.02/lb and jump to US$8.42/lb in 2019, then climb to US$9.45/lb in 2020.
In the past 12 months, nickel has picked itself off the ground and staged a come-back, with the price rising from around US$4.50/lb to its current level of about US$6/lb after pushing past US$7/lb in April and June.
Commenting on the nickel price, Western Areas (ASX: WSA) managing director Dan Lougher said it was “still a bit wobbly”, but that “times were changing” for nickel, due to its consumption within the growing electric vehicle and lithium-ion battery sectors.
Rox Resources (ASX: RXL) managing director Ian Mulholland told Small Caps nickel had clearly been the star commodity in the last 12 months.
And as a result, he said investor interest in the company’s high-grade nickel sulphide assets had “absolutely” increased.
He added he anticipated this would continue as demand for the commodity continues its upward trajectory and London Metals Exchange stockpiles carry on diminishing.
Meanwhile, Independence Group (ASX: IGO) managing director Peter Bradford said nickel was “probably the most preferred commodity moving forward”.
“That was clearly the sentiment at this year’s Diggers & Dealers,” he noted.
“In short, the market fundamentals are good and investors are looking for opportunities for more exposure to nickel.”
Financial services company UBS also reported that nickel was its “preferred play” in the next 12 months due to its uptake in electric vehicle batteries, with demand “rapidly rising”.
Additionally, Mr Bradford pointed out that WA’s nickel sector was in the “box seat” to meet this forecast nickel demand.
If the glowing nickel sentiment at this year’s Diggers & Dealers is anything to go by, then many ASX-listed nickel stocks will be worth watching in the coming months.