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Highlights
- Nickel is a key metal and has several applications, such as being a key component for EV batteries, manufacturing of stainless steel, etc.
- The metal’s prices reached an 11 year high on 14 January driven by supply squeeze and other related factors.
Nickel has grown in importance as a critical metal for the future, especially as it is a key component for lithium-ion batteries in electric vehicles (EVs).
EVs have been witnessing a wider interest since last year after the UK disclosed its plans to phase out fossil fuel-powered vehicles by 2030 and mandated all new vehicles to be zero-emission vehicles starting from 2035. A part of the UK’s efforts to transition to a lower carbon-emitting economy.
Nickel also has uses in industrial applications such as in making stainless steel, furnace wires, and many other areas.
On 19 January, the London Metals Exchange (LME) said nickel prices rose due to high demand from EV battery-making companies, supply squeeze, and low inventories. Nickle’s 3-month contract prices (having an expiry of 19 April 2022) were at USD 22080.00, up by 0.08 per cent, on 19 January at 18:59 hrs BST. It had reached an 11 year high of US$ 22,935 on 14 January.
Given this rise in demand for the metal, let us, deep dive, into 2 FTSE 100 index listed nickel related stocks and explore their investment prospects:
- BHP Group PLC (LON: BHP)
BHP is a multinational metals and mining company and is one of the leading suppliers of nickel.
The group’s Dec H21 nickel production stood at 39.3 kt, down by 15 per cent from Dec H20. Its production guidance for FY 2022 remained unchanged at 85 kt to 95 kt.
The group has a market cap of £51,006.53 million and a one-year return of 16.59 per cent as of 19 January.
- Glencore PLC (LON: GLEN)
Glencore is an Anglo-Swiss company in the commodity and mining sector. It is one of the leading producers of nickel in the world. It is set to release its production report for the 12 months ended on 31 December 2021, next month (2 February)
Its YTD 2021 nickel production stood at 71.1 kt, compared to 81.8 kt in YTD 2020, as per its third-quarter 2021 production report. The drop was due to the planned maintenance of Murrin Murrin and due to having various operation-related challenges at Koniambo.
It maintained its full-year guidance, estimating its FY 2021 production for nickel to be around 105 kt (having a plus/minus margin of error range of 5 kt)
The group has a market cap of £54,576.88 million and a one-year return of 51.85 per cent as of 19 January.
Tags: nickel, EV, Glencore, BHP, FTSE 100 index, bluechip
