Following the surge in nickel prices on the back of Russia’s invasion of Ukraine, prices may remain highly elevated over the course of 2022 and beyond according to Fitch Solutions.
On March 8, nickel prices on the London Metal Exchange (LME) soared to record highs of US$101,365/tonne ($139,343/t) up from US$25,557/t ($35,136) at the beginning of the month.
Concerns over supply disruption amid the Russia-Ukraine conflict prompted a sharp initial rise, before a reversal of the short position held by Xiang Guangda, founder of Tsingshan Holding Group, caused them to spike further.
Prices later fell back to US$48,063/t ($66,079) but trading on the LME was suspended on March 8 and remains so at the time of writing.
In 2021 Russia was responsible for 9.3 per cent of the world’s nickel mine production, and around one-fifth of refined nickel.
“We believe that prices could remain very high in the near and medium-term, in excess of previous historical highs, due to the prospect of greater sanctions from the west, firms pre-emptively self-sanctioning, and possible export restrictions from Russia,” a statement from Fitch read.
“Even an end to the war in Ukraine and a withdrawal of sanctions would, most likely, still leave nickel prices above our previous expectations for the medium term at least.”
Aluminium prices could also rise further but are currently stabilising, with Russia having produced 5.4 per cent of the world’s aluminium in 2021.
On March 4, aluminium futures on the LME surged to record highs of US$4100/t ($5640).
Despite a subsequent correction down to around US$3470/t ($4773) by close on March 10, Fitch said that supply disruptions from Russia will keep prices above the range of US$3000/t ($4126) which they were trading at in late January as tensions around Ukraine continue.