The SHFE’s most-traded January nickel contract hit its daily upper limit at 99,340 yuan ($14,975) per tonne as of 02:02 GMT, up by 4.3% or 4,130 yuan compared with the previous session’s close.
Meanwhile, the February and March nickel contracts on the SHFE also reached their daily upper limit earlier in the session at 99,980 yuan per tonne and 99,240 yuan per tonne, respectively.
This follows a rally in the three-month nickel price on the London Metal Exchange overnight.
The LME’s three-month nickel contract closed at $12,405 per tonne on Tuesday, an increase of $645 compared with the previous session’s close.
The strong gains come amid increasing optimism towards nickel’s prospects in the EV battery sector.
“Nickel led the sector higher … as the market becomes increasingly confident about its place in the electric car movement. … Producers and traders speaking at the LME Week have all spoken positively about the growth in demand expected from this sector,” ANZ Research noted.
“Trafigura estimates that demand for nickel sulphate will double by 2030 as a result,” it added.
Nickel consumption in EV batteries is forecast to rise to about 220,000 tonnes in 2025 from 40,000 tonnes in 2016, Wood Mackenzie principal analyst Sean Mulshaw said in a report last week.
Moreover, the Chinese government has ordered nickel pig iron (NPI) producers in the country’s Shandong province to cut capacity from mid-November to mid-March 2018 to alleviate pollution.
Shandong Xinhai Technology, China’s largest NPI-only producer, is one such producer that has been ordered to halve production during the four-month period – which could remove around 200,000-250,000 tonnes of NPI from the market over the four month period, Metal Bulletin understands.
Meanwhile, the other base metals have been broadly supported by steady data out of China this morning.
China’s Caixin manufacturing purchasing managers’ index (PMI) for October came in at 51, meeting expectations and flat with the previous reading.
The reading signaled a marginal improvement in manufacturing operating conditions across China, a Shanghai-based base metals analyst said.
Base metals prices
Currency moves and data releases