The ore went to a stockpile ahead of the concentrator’s restart in the June quarter, with the prospect of pending sales receipts enough to carry Mincor to a A$1 billion market cap.
It has been there before. Back in 2007 the nickel price cracked an extraordinary US$50,000/t, only to crash back to earth in the following years in response to the global financial crisis.
The 2007 high in the nickel price was extraordinary all right, but it was not a patch on this week’s craziness.
So crazy in fact that the London Metal Exchange suspended trading in the metal on Tuesday morning after a short-covering squeeze sent the price ballistic.
It doubled from Monday’s close of $48,063/t to as high $101,365/t before trading down to a still off the charts $80,000/t before the LME stepped in.
Some context. Nickel averaged $18,474/t in (calendar) 2021 which itself was up by a none too shabby 34% on the 2020 average of $13,803/t.
Solid growth in demand from the current main market of stainless steel and fast growing demand from the “new” battery materials market was behind the 2021 gain which was enough in itself to nickel at the lower end of the $18,000-$20,000t price range in which nickel producers start to feel good about things.
But come February 24, Russia invaded Ukraine, setting the stage for nickel to take off to the $48,063/t level seen on Monday. Russia accounts for about 7% of global supply but more telling, its production accounts for 17% of the Class 1 stuff that the battery makers prefer.
So the market was rightly worried about the future of Russian supplies, given the West’s wall of trade sanctions against the aggressor.
Add in a short covering squeeze – China’s biggest producer Tsingshan is said to be the big shot involved – and the scene was set for Tuesday’s price madness, and the LME’s dramatic intervention.
