Why Caledonian nickel might shine at Christmas
The price of nickel is rising in London in the wake of the sharp rise in the Chinese industrial, stainless and battery markets. An analysis note from Capital Economics, one of the world's leading independent economic research firms, sees the price of nickel climb to $16,000 per tonne in 2021.
Nickel prices hit $15,275 a tonne on the London Metal Exchange yesterday morning, nearing their September 15 peak of $15,365. According to SMM, the review of the Shanghai Metal Exchange, industries consuming nickel, stainless steel, electroplating, alloys and batteries are still growing. After a difficult first half, consumption has been increasing since August. The steel and automotive industries, particularly the electric battery sector, are performing well.
Tesla boss Elon Musk recently voiced concerns about a possible shortage of nickel, a metal essential for making batteries for electric cars. As a result, will there be an in-extremis rescue of the southern plant in New Caledonia which produces the rare battery-grade material? Several sources mentioned that the CEO of Vale-NC, Antonin Beurrier is in Paris negotiating with a consortium of five potential buyers for Vale-NC, including a manufacturer in the automotive sector.
Nickel prices have been rising for several months, for the greatest benefit of Eramet, the French mining and metallurgical group. The return to better fortune is a bet taken by the Franco-German bank Oddo-BHF. Its analyst firm went from "neutral" to "buy" on the title, with a target price on the Paris Bourse raised by 3 euros, to 29 euros.
The state could be called upon to help Vale-NC and SLN, Les Echos reported, citing Oddo-Bhf, "Eramet's financial and operational situation remains complicated, but the catalysts that we anticipate during the first half of 2021 should make it possible to reduce the discount on the title Eramet", concludes the analysis office. Following this optimistic note, on Friday, Eramet shares rose more than 12%.
Nickel price at the LME in London, on 12/10/2020 at 13:00 GMT: 15,272 dollars / ton + 0.54%.