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- Nickel will continue to outperform the base metals complex over the coming months, said Fitch Solutions in a report released last week.
- “Speculative buying driven by nickel’s bright EV demand outlook has been the key driver of the metal’s positive price performance in recent months, while the breaching of a key resistance level this week suggests prices have further room to run over H219,” writes the reports authors.
(Kitco News)Â – Nickel will continue to outperform the base metals complex over the coming months, said Fitch Solutions in a report released last week.
“Speculative buying driven by nickel’s bright EV demand outlook has been the key driver of the metal’s positive price performance in recent months, while the breaching of a key resistance level this week suggests prices have further room to run over H219,” writes the reports authors.
Fitch noted that nickel prices have rallied over 20% year-to-date, while its base metals peers have all lost in value, placing the former as the only base metal in positive territory so far this year.
“As we pass the mid-point of the year, below we analyse why nickel prices have been significantly outperforming other base metals, despite a number of challenges in terms of fundamentals and on the macroeconomic front.”
Fitch says the price run up is due to antcipated electric vehicle adoption.
“We believe the main driver of the nickel price rally has been the sustained level of speculative buying – with non-commercial long positions on the rise so far this year – due to the metal’s ongoing allure as key demand-beneficiary among metals used in the growing EV battery market. While electric vehicle batteries still only account for less than 5% of total refined nickel demand, this figure is set to grow considerably over the coming years and investors are already placing bullish bets in anticipation.”
Fitch estimates that nickel will be in a deficit of 23kt this year, down from 51kt last year.
The authors caution that the larger macroeconomic environment could hamper a break out.
“The global macroeconomic environment has also worsened so far this year, which has led to negative sentiment for base metals generally. This deterioration is primarily down to the escalation of the US-China trade dispute and slowing growth in China, where manufacturing PMI’s have dropped below the all-important 50 mark in recent months. Were the conflict to escalate further in the coming months, nickel prices could be dragged lower in line with other base metals.”
Source: https://www.kitco.com/news/2020-06-15/Nickel-set-to-pierce-shaky-macroeconomic-outlook.html
Tags: CSE, nickel, nickel demand, small cap stocks