The Russian invasion of Ukraine has
propelled many metals used in manufacturing automobiles
to new highs in recent days.
And one medal in particular is getting a lot of attention.
Nickel
nickel prices remain halted on the London
Metal Exchange after surpassing $100,000 per metric ton
for the first time in history. On Tuesday,
the electric automaker's in particular could be in trouble as nickel is used
for making stainless steel and for its use in E V batteries.
It's a big deal to them
joining us now to bring us all down as shadow reporter, Alex Dotolo and Alex.
What factors are causing this price to spike?
Hey ken.
So I want to separate what happened to the price of nickel yesterday
and what's been happening to the price of nickel over the last week.
The eye popping $100,000 per ton that we saw yesterday
was largely result of a Gamestop style short squeeze,
essentially a chinese billionaire had a huge short position on nickel
and as those margin calls came, he was forced to try to cover that position,
which just sent the prices skyrocketing.
Which is why the London metal exchange shut down and remains shut down for now.
Uh, before that, what was happening is,
has entirely to do with the fear over the fact
of the Russian supply getting cut off due to sanctions.
Now this hasn't happened yet.
But if it did, it could potentially be very consequential to the price of nickel.
The country
produces about 6% of the global supply and about 17% of the
supply of the higher grade quality nickel which is used in E.
V batteries.
Now, what challenges is this price hike going to put on companies like E.
V battery makers?
So as Elon musk tweeted last month,
quote nickel is our biggest concern for scaling lithium ion cell production.
Uh, and I think that is definitely a shared concern in the E. V space for a long time.
The price of battery production was going down and it still is.
But the price contribution of metals is going up for the very fact that
more people want them.
As you said earlier, stainless steel production is the biggest use for nickel.
But E V batteries are quickly rising in their share.
So going forward, they could pay a lot more
to for their battery production.
It could also mean in certain cases, if you have trouble getting your hands on nickel
uh, it could be an actual little extra existential threat to your business.
You know,
as companies like Tesla scrambled to get their hands on their own resources.
Uh, it could get a lot harder, particularly for smaller players to compete.
All right, what is the U. S. S. Strategy for dealing with these crazy high prices?
So the biden administration has gestured toward on shoring uh, the E.
V supply chain, the battery supply chain in particular.
And it has made strides in that area.
And we could see more when the bipartisan innovation act is eventually passed.
But when it comes to mining specifically, it's really,
I think one of the biggest unknowns,
there was a report recently that the biden administration will continue
to look two allies for the supply of medals.
While the administration kind of shot back that it is looking into, you know,
more fully on shoring
even the supply of medals.
But you know, speaking to people in the mining industry, they're not seeing it.
Uh, they're really not seeing the development of active minds
in the US or north America are really
what they call safe jurisdictions, democracies,
countries in europe that don't want to see a new nickel mine in their backyard.
Uh, so again, it's, I think it's, it's, it's kind of an unknown.
But right now I think it's one of the biggest parts of the biden administration sort
of supply chain efforts that we don't know for sure what's going to happen now.
My last question for you is this a long term thing or
a short term thing when it comes to this high price.
So as I said earlier about that $100,000 per ton that is not sustainable.
Uh, speaking to people in the business,
they simply will stop buying nickel if that's the price.
But uh,
the more elevated prices that we've seen in
recent weeks and months and over the last year
are not, we're probably not going anywhere soon because as I mentioned,
these are structural changes that are occurring across the world,
The demand for e v batteries is only increasing, so we are likely to see a long term,
uh, kind of commodity rally with nickel.
Alright, that's cheddar Reporter, Alex.
Volo Alex, thank you as always, for breaking it down for us.