Nickel Prices Rebound... Related ETNs 'Smiling'

'Daesin 2X Nickel Gift ETN' Surges 40%

[Asia Economy Reporter Minji Lee] Nickel prices, which had plummeted due to a sharp drop in demand caused by the spread of the novel coronavirus infection (COVID-19), are showing signs of rebound. As major countries resume economic activities, there are expectations that demand for nickel may increase further, leading to growing interest in nickel-related derivatives.

According to industry sources on the 20th, nickel spot prices traded on the London Metal Exchange (LME) on the 17th recorded $13,281 per ton, up about 20% from this year's intraday low of $11,055 per ton. Although it is about 28% lower than last year's intraday high of $18,330, compared to the beginning of this year, the decline caused by COVID-19 has been fully recovered.

Nickel ore mined and processed from a nickel mine in Australia. Photo by Bloomberg

Domestic nickel-related exchange-traded notes (ETNs) are also continuing their strong performance. The 'Daishin Nickel Futures ETN' rose about 19% from the March low of 10,655 won to 12,675 won as of the previous trading day. The 'Daishin 2X Nickel Futures ETN' also surged about 40%. These products track the daily returns of nickel futures listed on the LME at 1x and 2x leverage, respectively. Conversely, the 'Daishin Inverse Nickel Futures ETN' and 'Daishin Inverse 2X Nickel Futures'?which profit when the daily returns of nickel futures fall?declined by about 18% and 35%, respectively.

Last year, nickel approached the $20,000 mark, reaching the highest level in the past five years. Accordingly, many expected the nickel price to continue rising this year, but it plunged due to the spread of COVID-19. Given that major countries are showing signs of economic recovery after COVID-19, nickel prices are expected to maintain an upward trend. China, the largest consumer of nickel (49%), is expected to restore economic activities to pre-COVID-19 levels in the second half of the year, raising expectations for further price increases.

It is also positive that major countries including France, Germany, and the United Kingdom have launched policy support for EVs. When production surges explosively due to purchase promotion policies, the demand for nickel, a raw material for EV batteries, is expected to increase more significantly than before. Jiwoo Son, a researcher at SK Securities, explained, "Since the resumption of economic activities, nickel prices have been rebounding from the second quarter. Considering the increase in STS production and demand and the recovery of EV battery volumes, further price increases are expected." Individual investors are already betting on the trend of rising nickel prices. Over the past 10 trading days, the most purchased product by individuals in the ETN market was the 'Daishin 2X Nickel Futures ETN,' with net purchases of about 5 billion won during this period.

This content was produced with the assistance of AI translation services.