Why Have Nickel Prices Dropped to a 4-Year Low?
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The demand for battery-grade nickel is expected to rise significantly by the end of the decade due to increasing electric vehicle adoption. However, Donald Trump’s U.S. presidential election victory led to volatility and uncertainty in the nickel market, according to S&P Commodity Insights data. Additionally, the future of nickel and electric vehicles (EVs) could be impacted by Trump’s potential changes to the U.S. Inflation Reduction Act (IRA), which includes a consumer tax credit for EVs.
Battery-Grade Nickel Demand Rises Amid EV Adoption, Faces Volatility Post-Trump Election
Surging EV adoption forecasts significant growth in demand for battery-grade nickel by the end of the decade. The nickel market, however, experienced volatility and uncertainty in November 2024, largely due to macroeconomic and political developments following Donald Trump’s U.S. presidential election victory.
Trump’s Victory Impacts Nickel Market
Key to producing alloys and stainless steel used in equipment, transport, buildings, and power generation, nickel is a vital element whose major producers include Indonesia, the Philippines, Russia, and Australia. Indonesia possesses the highest nickel reserves, while Australia boasts the most active mining projects. The London Metal Exchange trades nickel futures, reflecting its global industrial relevance. The LME three-month nickel price hit a four-year low of $15,540 per metric ton on November 15, 2024.
Trump’s potential economic policies, especially concerning China, the industrial metals’ top consumer, triggered investor caution. A strengthened U.S. dollar and increased LME nickel inventories further pressured prices downward, highlighting risk-off sentiment across metals markets.
Nickel Prices React Post-Election
Nickel prices increased after Trump’s election win, from $16,007 per metric ton on November 4 to $16,587 per metric ton on November 7. This boost mirrored U.S. equity market gains but quickly faded as the trade-weighted U.S. dollar index rose to a one-year high, driven by market expectations that Trump’s policies—such as higher tariffs on Chinese imports—could revive U.S. inflation. The prospect of prolonged high interest rates from the Federal Reserve further strengthened the dollar, making nickel and other commodities more expensive for non-dollar investors.
Nickel market sentiment suffered another blow as China unveiled a 10 trillion yuan fiscal stimulus package on November 8. The measures disappointed market expectations for more aggressive economic support. Coupled with rising nickel inventories and a nearly 4x increase in net short positions on LME nickel, the price decline accelerated. By mid-November, the LME three-month nickel price had plunged to lows not seen since November 2020, accentuating the market’s vulnerability to both economic and geopolitical developments.
Trump’s Plans: Implications for Nickel, EVs, and IRA
Trump’s election brought another layer of uncertainty to the global nickel market with possible implications for the U.S. Inflation Reduction Act (IRA). The IRA, signed into law by President Joe Biden in 2022, has been essential in driving clean energy initiatives, including a $7,500 consumer tax credit for electric vehicles. However, Trump’s transition team is reportedly considering repealing this tax credit as part of broader tax reform efforts. This could slow the adoption of EVs in the U.S., potentially undermining a significant driver of global primary nickel demand over the coming years.
Moreover, Trump’s administration may tighten IRA’s foreign entity of concern (FEOC) guidelines. These currently disqualify companies with significant Chinese ownership from benefiting from the EV tax credit. These stricter FEOC rules could potentially limit Indonesia’s ability to expand its nickel exports to the U.S.
Nickel’s Future Outlook Amid Short-Term Pain and Long-Term Gain
Beyond U.S. policy developments, other global factors contribute to nickel market uncertainty. Escalations in the Russia-Ukraine war have dampened investor confidence. Concerns about slowing economic growth in China continue to weigh on demand projections. Despite these challenges, S&P Global’s fundamental outlook for primary nickel supply and demand remains broadly unchanged from previous forecasts. However, the near-term trading environment is expected to remain difficult.
Amid these challenging market conditions, Alaska Energy Metals Corporation (AEMC) is leading efforts to support the U.S. energy transition through its flagship Nikolai project in Alaska. The site holds a significant resource of nickel, copper, cobalt, and platinum group metals essential for renewable energy and electric vehicles. The Canadian nickel junior’s dual focus on sustainability and critical mineral supply underscores its commitment to reducing U.S. reliance on imports.
With nickel prices already at a multi-year low, the market’s recovery will depend on clearer policy signals and stronger demand drivers, particularly from the EV and clean energy sectors.
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