Surge In Nickel Prices Due To War May Disrupt Electric Vehicle Battery Production

The Surge In Nickel Prices May Lead Manufacturers To Suspend Electric Car Assembly. Understand The Reason Below      

Since the first day of the war in Ukraine, the transition to a low-carbon economy has been relying on luck and facing numerous challenges. If the rising price of oil makes fossil fuels increasingly expensive, the sanctions and boycotts against Russia also have great potential to disrupt the supply of essential materials in the automotive industry, such as nickel, which is used in the manufacture of batteries for electric cars and other electrified vehicles.

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Understand The Relationship Between The War And Nickel Supply In The Electric Car Manufacturing Industry

Shortly before the invasion by Moscow, nickel reached a price margin of US$ 23,565 per ton, representing an increase of 1.8% compared to the previous quarter.

On the Shanghai Futures Exchange, an important financial market where purchases and trades occur for future dates, nickel prices reached a record trading value of 193,370 yuan per ton, equivalent to US$ 30,539.

Before the announcement of the start of the war, this was the highest price ever traded, but it did not exceed 176,280 yuan, equivalent to US$ 27,796.52. Indeed, it is evident how these trends are negatively affecting the electric car market.

During The War, Major Metal Exchange Suspends Nickel Trading

Last Tuesday, the 8th, all this risk began to materialize when nickel prices surged in what analysts called “the black swan of black swans,” referring to the unpredictable financial market that contains extremely rare events that can have a significant, often severe and lasting impact.

Still on Tuesday, the 8th, in a historic decision, the largest and one of the most important metal exchanges in the world, the London Metal Exchange, decided to suspend nickel trading after the price of the 3-month contract more than doubled, exceeding US$ 100,000 per ton. Nickel had already increased by around 80% on Monday, the 7th, reaching 250% in just 2 days.  

Automakers Risk Suspending Electric Car Production And Other Electrified Vehicles Due To Nickel Shortage, Essential For Battery Manufacturing

Nickel is a sought-after and tested material, a critical input essential for the manufacture of lithium batteries used in electronics and electric cars. With prices soaring, large and ambitious electric car programs around the world are being put to the test. However, this is not the biggest issue.

According to Goldman Sachs, a multinational financial group headquartered in New York’s Financial District, an estimate indicated that nickel stocks would be lower than previously forecasted.

According to Goldman Sachs, in August 2021 it projected a serious deficit of around 13,000 tons, and now it anticipates figures around 30,000 tons, almost 3 times more than previously estimated. It remains to be seen whether manufacturers will have the capacity to respond and find good solutions.