SHANGHAI, Mar 10 (SMM) - Dr. Yanchen Wang, managing director of SMM Global UK and a veteran analyst of global commodity market, was recently invited to comment on the latest volatilities and changes concerning the base metals including nickel and aluminium relating to the Russia-Ukraine tensions in a CGTN news program on the evening of March 9.
As for the “crazy” market dislocation for nickel, Dr. Wang suggested that the robust global economic recovery in the post-pandemic era is among the major causes, evidenced by the continuously falling LME inventory from over 250,000 mt in March 2021 to the less than 75,000 mt now. And the market has been extremely worried about supply issues on the back of Russia-Ukraine conflicts as Russia is an important supplier of primary nickel. A short squeeze further aggravated the market situation, which is the main reason for the skyrocketing nickel prices.
Dr. Wang believed that nickel prices will return to normal after resuming market, when LME announced to suspend the trade of nickel contracts earlier, allowing long and short investors to negotiate over the current situation.
In addition, surging prices of nickel, an important raw material, may suppress the development EV batteries, as high battery prices will inevitably lift the prices of electric vehicles, damaging the de-carbonisation process in EU and around the globe.
The on-going sanctions on Russia are expected to result in a rise of aluminium prices as the prices did surge back in 2018 when the Rusal, the world’s second largest aluminium producer, was sanctioned. In this case, the global trade flow will change and rebalance, subsequently affect global aluminium demand.
Russia, in response to Western sanctions, is considering to ban the exports of certain commodities as well, though no specific details about targeted counties or commodity have been mentioned. But it is almost certain that the market prices will keep rising as the market is already in a deficit in terms of various metals.