The adoption of electric vehicles (EVs) hasn’t quite caught on with consumers, adding to a supply glut for nickel. However, the potential of supply disruptions combined with a weaker dollar could push the metal’s prices higher in the long-term investment horizon.
Per a Mining.com report, research company Fitch solutions is forecasting a macroeconomic environment that is more favorable for the element in the long term. In addition the aforementioned supply disruptions, rate cuts leading to a weaker dollar should also pave the way for higher prices for the element.
“Despite the pressures on nickel prices at present, Fitch expects upside risks – including potential supply disruptions and a weakening of the US dollar later in the year – to place a floor under prices throughout the year, preventing a significant decline from current levels,” the Mining.com report said.
“Beyond 2024, Fitch expects nickel prices to increase steadily to 2028, rising to $21,500/tonne as the market surplus narrows on the back of surging demand for nickel along with the rise in the production of EV batteries,” the report added. The report noted, however, that production output in Indonesia could temper prices.
Given the growth potential, investors looking to add assets uncorrelated to traditional stock and bond markets may want to add nickel miners to their portfolios as a way to capitalize on higher prices. Easy access to the metal’s mining industry is available with the Sprott Nickel Miners ETF (NIKL).
NIKL is the only ETF to provide focused exposure to such miners. Per its fund description, NIKL seeks to provide investment results that track the total return performance of the Nasdaq Sprott Nickel Miner Index (NSNIKL). The index tracks the performance of a selection of global securities in the industry. These include producers of the element as well as developers, and explorers.
Strong Long-Term Fundamentals
In addition, NIKL offers global diversification with demand for nickel gaining momentum amid the worldwide energy transition phase. Its country breakdown includes holdings in Indonesia, Australia, and Canada, to round out the top three.
Fitch’s price forecast also corroborates with Sprott’s insights regarding the direction of nickel prices in the long term. The metal’s fundamentals remain strong in spite of the current supply glut, leading to upside in the future as demand for EVs rise to meet global emissions goals.
“Despite the current supply glut, we believe nickel’s long-term fundamentals are strong,” a Sprott report noted. “In future years, companies and governments will likely need large amounts of nickel to reach net-zero emissions targets. Many large economies, including Australia, have listed nickel as a critical mineral.”
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