⁍ The London Metal Exchange nickel price last week touched a year-to-date high of $16,135 per tonne.

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⁍ Nickel bulls would love to believe this is all about rising usage in lithium-ion batteries for electric vehicles.

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⁍ The reality is that the recent rally is much more about the supply of nickel ore to China’s giant stainless steel sector.

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– Nickel hit a year-to-date high of $16,135 per metric ton on the London Metal Exchange last week, and analysts say it’s all about old-school supply and demand dynamics, not, as one puts it, “a tangible buzz in the nickel market over the last two years with Tesla’s Elon Musk recently fanning the flames with his call for more mines to meet demand for electrification.” That’s because nickel ore is used in stainless steel mills in China, and Indonesia banned exports of nickel pig iron this year to make miners upgrade their supply chain, reports Reuters. China’s supply of NPI is falling, and the price of medium-grade Philippine ore, which is used in stainless steel mills, has doubled over the course of this year to a current $74 per ton. That in turn feeds directly into higher costs for the NPI producers that supply China’s stainless steel mills. “The reality is that the recent rally is much more about that most traditional of price drivers, namely the supply of nickel ore to China’s giant stainless steel sector,” says one analyst. “Such old-school dynamics are going to push the global market into a period of over-supply this year and next, according to the latest forecasts from the International Nickel Study Group.” Nickel bulls would love to believe this is all about rising usage in lithium-ion batteries for electric vehicles. Nickel bulls would love to believe this is all about rising usage in lithium-ion batteries for electric vehicles.