Nickel prices hit their highest level in more than two months on Thursday as investors bet that prices had reached a floor.
Three-month nickel on the London Metal Exchange rose 0.4% to $17,675 a metric ton by 1100 GMT after touching $17,830, its highest since Nov. 10, 2023.
LME nickel has rallied 8.6% this month, and is on track for its first monthly gain since July.
The most-traded May nickel contract on the Shanghai Futures Exchange climbed 1.7% to 137,710 yuan ($19,140) a ton. The contract is up 7.1% so far this month.
[Click here for an interactive chart of nickel prices]
“People are asking, is the cost floor high enough now, have we reached a floor in nickel? It does feel like the super bearish narrative is being challenged,” Dan Smith, head of research at Amalgamated Metal Trading said in a note.
Nickel experienced the most significant decline among all LME base metals last year, dropping by 45% due to weakening demand and a consistent increase in Indonesian production.
“The most recent LME positioning data showed prices were being lifted on a combination of bearish speculators closing positions and a smattering of bullish inventors buying new ones,” Smith added.
Meanwhile, the Indonesian government said on Thursday that EV producers shouldn’t anticipate any significant recovery in prices.
Septian Hario Seto, the government official overseeing Indonesia’s nickel processing boom, said that prices are unlikely to exceed $18,000 a ton on the London Metal Exchange. The Southeast Asian nation intends to ensure the market remains adequately supplied to maintain lower costs for electric vehicle manufacturers, Seto said.
“This concept must be well understood by all nickel producers elsewhere,” Seto, a deputy at the Coordinating Ministry for Maritime Affairs and Investment, said in an interview on Wednesday.
“The government’s objective is to establish an equilibrium to ensure that nickel demand, particularly for EVs, is met adequately.”
(With files from Reuters and Bloomberg)
