Nickel Bull Glencore Says Many in the Market Missing Vital Signs

LAGOS (Capital Markets in Africa) – Commodity powerhouse Glencore Plc gave a ringing endorsement of the prospects for nickel, saying that most participants in the market don’t realize how strong demand for the metal now is and haven’t grasped the magnitude of the global deficit even as stockpiles dwindle.

Worldwide consumption will outstrip supply by 124,000 metric tons next year after a shortfall of 178,000 tons in 2018 and deficits in the prior two years, the company said in a presentation. Demand is strong, including for stainless steel, and more nickel will be needed for electric-vehicle batteries, it said.

“Demand is much stronger that most market participants recognize, and the deficit is much higher than people think,” Glencore said in the Nov. 1 overview, noting a substantial drop global inventory since 2015. “There is very limited supply-side response excluding Indonesia. That will not change soon.”

Nickel has lost about 9 percent this year, closing at the lowest since December this week, as trade-war concerns hurt metals and investors tracked early efforts by a major Chinese producer to develop new technologies that could drag prices lower. That drop has come even amid sustained enthusiasm for the potential jump in demand for nickel given its use in electric-vehicle batteries.

“As evidenced by substantial inventory draws, nickel producers are unable to service demand,” said Glencore, which listed nickel operations in North America, Australia, Africa and New Caledonia. “The need for new supply will only become more pressing if EV-battery demand meets expectations.”

Source: Bloomberg Business News