I wrote recently about the seemingly ‘perfect storm’ that caused nickel prices to sky-rocket and investors like me to jump with joy.
The factors I discussed last time were the export-ban from Indonesia and the continued rising need worldwide, but particularly in China. Well, if you could believe it, the situation is actually getting better for nickel creating one of the most incredible bull markets I’ve seen in a long time and making nickel an international star this year.
As a consequence of the Indonesian export-ban, the Philippines stepped in as one of the world’s leading producers, and has become the supplier of 98% of China’s nickel.
Two changes to the market are about to make this even more interesting.
First, the Philippines is discussing a similar export-ban to that of Indonesia. This would mean that yet another world players on the nickel market has bowed out of the raw ore export business for the time being meaning huge gains for companies like Norilsk Nickel, but also higher prices on the international market as supplies continue to drop.
Second, China, one of the world’s largest consumers of nickel (and a huge beneficiary of nickel from the Philippines), will not only need to find a new trading partner, they’ll need to replace nearly 100% of their annual consumption. Additionally, the once vast stores held in China are nearly all depleted meaning they are likely looking to not only find a new trading partner but to also build up stores for future use.
With all that said, investors the world over are excited to see what this bull market can accomplish in 2015. Nickel is already up 40% in 2014 to $19,400 per metric ton and so much more is possible next year.