Nickel's Unexpected Tumble: Year-to-Date Losses Amid Market Changes
Explore how nickel futures slipped to a YTD loss, influenced by Indonesia's mining quotas and global market oversupply.
Nickel, a metal often overlooked yet vital, has unexpectedly swung into a year-to-date (YTD) loss, trading at $15,120 per tonne in July. This shift in momentum is breaking expectations as market watchers believe a persistent oversupply continues despite attempts to curb it.
Excess Supply Drives Changes
In a stunning turn, Indonesia’s massive nickel outflows led to a decision to cut mining quotas by 120 million tons, slashing global supply by a striking 35%. This move comes in response to Chinese smelting projects flooding the market after Indonesia’s 2020 export halt on nickel ores.
The Rise of Smelting Operations
Indonesia is now a powerhouse with 44 smelting operations as of September, a growth from just four a decade prior. The rapid expansion signifies a shift in the industry’s landscape.
Nickel Stockpiles Swell
Nickel stock in LME warehouses has climbed by 50,000 tonnes since the start of the year, reaching 200,000 tonnes. This increase highlights the market’s ongoing struggle with oversupply.
External Pressures Mount
Adding to the turmoil is uncertainty regarding U.S. trade policies. The potential for reviving aggressive tariffs against trading partners looms over base metals, further impacting nickel’s market stability.
Looking Ahead
According to TradingView, market analysts are keenly observing these developments. With policy decisions and global economic shifts constantly in play, the nickel market’s future remains unpredictable.
In an ever-changing landscape, the ripple effects of nickel’s journey this year serve as a striking testament to the complexities of global economics.