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Stainless Set to Lose Nickel Dominance to EVs

Stainless steel is set to lose its position as the primary driver of global nickel pricing, concludes a report by Bank of America.

Nickel is currently at a multi-year high, the bank says – or $18,895/tonne, according to the London Metal Exchange. Concurrently, global stainless output hit a record in the third quarter of 2020 “…and has continued to post a series of highs since,” the report states.

However, while stainless currently enjoys a 70% chunk of the nickel market, that position is being challenged by the growth of the electric vehicle industry, Kallanish understands.

“While the rebound of stainless production has been key to the nickel market in recent months, electric vehicles (EVs) are set to become the key demand driver in the coming years,” Bank of America says. “Indeed, sales of electric vehicles should increase gradually, reaching a penetration rate of 51% by 2030E. Given the current battery technology, implications for consumption are relatively straightforward, with offtake expected to be increasing to just under 1.8 million t by 2030, compared to around 200,000 t this year.”

Much of that added nickel is likely to come from Indonesia, the bank adds.

“Reduced consumption of Class 1 nickel by the stainless steel mills may make more nickel units available to car manufacturers; rising scrap usage is one way this could be facilitated,” it says. “That said, ultimately, miners will need to produce more Class 1 and perhaps less Class 2 nickel to make sure the metal will not turn into a constraint to the EV industry. Indonesia, with its resources, will likely remain key to accomplishing that.”

Dan Hilliard USA