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Commodities Trading: Why is nickel so bullish while the other industrial metals are making still losses this year so far (May2014)?

  • The nickel ETF (JJN) is making double-digit gains while the other industrial metals are still making losses. What is the reason for nickel's unique outperformance compared to its siblings in the industrial metals asset class? Shouldn't nickel be correlated with the other industrial metals?

  • Answer:

    The price of nickel is heavily dependent on the production of stainless steel. Two-third of all nickel produced will end up in stainless steel. With the increased demand for stainless steel, the demand for nickel increases. When economies pick up speed and output of cars, machines etc increases, the demand for stainless steel increases. This is currently happening in the US and the EU. Add the Chinese demand and the world is now facing a nickel deficit market, boosting the prices even more.

Martijn te Selle at Quora Visit the source

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This is because of the Indonesian ore export ban. China, being the top producer of refined nickel used in steel making, used to import Indonesian ore to refine domestically. However, with the halt of nickel exports from January 2014, there is now a risk of supply shortage, thus driving nickel price up strongly.

Lynette Faith Tan

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