Nickel Bounces Back on Strong EV Demand
Nickel futures are back to a 7-year high and recently hit $19,000 a ton in a resurgence from last month’s pullback.
Nickel prices are being supported by strong battery-related demand from electric vehicle (EV) makers. Additionally, nickel enjoys support from industrial users amid shrinking supplies.
On the EV front, sales of electric autos are rising worldwide as demand continues to increase on the back of government initiatives to encourage greater EV use and less internal combustion engine (ICE) autos.
According to the latest figures from the European auto industry, the share of EVs in the first half of 2021 rose near 8% of the new car market in Europe (from 4.3% in 2020). Plug-in hybrids added an additional 8.3% to the total, up from just 3.5% in the year-ago period.
Elsewhere, in China sales of EVs more than doubled in July, including battery-powered electric vehicles, hydrogen fuel-cell autos and plug-in hybrids. China’s move away from ICE vehicles to reduce pollution has prompted domestic EV makers to increase manufacturing capacity in the mainland.
Meanwhile, refined nickel inventories in China’s warehouses recently hit a record low while stockpiles in LME warehouses have declined to their lowest level since January 2020.
What to Do Now
After being profitably stopped out of our former trading position in the iPath Series B Bloomberg Nickel Subindex Total Return ETN (JJN) last month, I’m putting this ETN back on a buy after the recent strengthening in the nickel price. Keep in mind this is an exchange-traded note (ETN), not a traditional ETF, which is an unsecured debt note that trades more like a bond than a stock. That said, I recommended only a small, conservative position in this nickel-tracking vehicle. I also suggest using an initial stop-loss slightly under 23.90 (the nearest pivotal low) on an intraday basis for this trading position. BUY A HALF
