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Nickel rallies more than 100% in two days

ICICIdirect Research 08 Mar 2022 DISCLAIMER

What’s Buzzing:

Over the last couple of days, global nickel prices witnessed a sharp rally over fear of supplies from Russia amid a huge short squeeze. On March 7, 2022, nickel prices witnessed a sharp rally rising a whopping 63% to US$48201/tonne. The rally extended gains on March 8, 2022 also crossing 2005 highs of ~ US$54000/tonne and is currently hovering at the ~US$80000/tonne mark. Overall, in two days, nickel prices have rallied more 100%.


Nickel is currently experiencing one of the sharpest upticks witnessed in any commodity in modern history. Russia is the world’s third largest nickel producer and accounts for ~7% of overall world nickel supplies. The ongoing short squeeze coupled with a supply fears from Russia is fuelling a sharp rally in global nickel prices. In terms of usage, 70% of nickel is used in stainless steel while 7% is used in EVs.

Our Perspective:

In India, Jindal Stainless (JSL) and Jindal Stainless Hisar (JSHL) are the two largest stainless steel producers, wherein both companies, combined, account for ~55% share in the overall domestic market. Over the last couple of quarters, it has been seen that a steady increase in nickel prices has resulted in inventory gains for both JSL and JSHL. While a steady price increase in nickel has had a positive impact on spread for stainless steel players in the near term, such a steep price would be difficult to pass through and is likely to result in demand deferral. Currently, as it is only a couple of days move it is too early to come to a conclusion and follow up trend in nickel prices have to be watched. Going forward, the nickel price trajectory till the end of the current quarter would remain a key monitorable to assess its impact of margins of stainless steel players. On the positive side, on March 8, 2022, stainless steel futures opened 12% higher in China (limit up), indicating demand being strong. Going forward, both companies are planning to increase their focus on the 400 series, which has low nickel content to reduce the volatility of nickel prices. Currently, for both entities combined (JSL + JSHL) the share of 400 series in overall volumes is ~22-24%, which the company plans to increase to ~30% in the next three to four years.

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