Nickel, Will It Increase Gains Ahead of 'Battery Day'?

[Asia Economy Reporter Minji Lee] Ahead of Tesla's 'Battery Day' on the 22nd (local time), there are opinions that attention should be paid to the expanding demand for nickel. It is expected that the issue of electric vehicles could be spotlighted again, potentially stimulating a rise in nickel prices.

According to the industry on the 15th, nickel futures traded on the London Metal Exchange (LME) stood at $15,267 as of the previous day. Compared to the beginning of this year, it has risen about 9%, and compared to the year's low point ($10,930), it has increased by approximately 35%. The price rise is due to disruptions in nickel ore production in major producing countries such as the Philippines caused by the spread of the novel coronavirus (COVID-19).

Amid this, there is a forecast that nickel prices could rise further due to expectations of improved demand for electric vehicle batteries. Battery Day is an event where Elon Musk, Tesla's CEO, announces Tesla's battery strategies and plans, and the related industry expects Tesla to unveil new battery technologies to the market. Previously, Elon Musk expressed during the Q2 earnings announcement that more nickel mining by mining companies is necessary for electric vehicle production.

[Image source=Yonhap News]

The market expects Tesla to reveal new technologies related to battery internalization, application of nanowire technology, and development of solid-state batteries. Accordingly, the securities industry anticipates that nickel demand will gradually increase as technology advances. Kwangrae Kim, a researcher at Samsung Futures, said, “By directly producing batteries that account for 40% of electric vehicle costs, Tesla is expected to reduce battery weight, increase capacity, and reduce cobalt content, thereby lowering costs and improving efficiency.” He added, “Even if large-scale commercialization of the announced technologies does not occur immediately, Tesla, as a leader in the electric vehicle market, presenting a blueprint for battery efficiency will lead to increased electric vehicle sales and nickel demand.”

The largest portion of nickel demand is stainless steel (63%), and demand related to electric vehicle batteries is still considered low. However, considering that most countries may mandate electric vehicle sales and ban internal combustion engine vehicle sales by 2030, nickel demand is expected to increase significantly in the long term. Researcher Kim analyzed, “Last year, Indonesia's nickel ore export restrictions and optimistic forecasts for the electric vehicle market pushed nickel prices up by nearly 90% compared to the beginning of the year. With Indonesia's exports limited and electric vehicle-related issues reemerging, there is material to expect upward momentum.”

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