Nickel dips in the wake of China’s energy crisis

Chinese government to sell further metals reserves after recent highs

Rolls of processed nickel                                 
The nickel price has slipped – Photo: Shutterstock

Nickel prices dipped on Monday, weighed down partly by an emerging power crisis in parts of China that has caused a reduction in factory output. 

The long-term global shift away from carbon-emitting cars has propelled the metal in recent years as it is essential in the manufacture of electric vehicle batteries. 

Recently, the nickel price had risen to its highest point in nine years after Indonesia’s investment minister said that the Southeast Asian nation could impose an export tax on nickel products with less than 70% nickel content in order to promote domestic industry.

China’s energy crisis

Having first had to emerge from the Covid-19 pandemic and still threatened by property group Evergrande’s recent travails, China’s economy is now contending with a potential power crisis. 

Whereas the recent energy crises in the United Kingdom and United States can be respectively attributed to supply chain disruption and hurricanes, China’s troubles could be said to be more self-inflicted. 

In order to achieve its aim of becoming a net-zero emitter of carbon by 2050, the government has started to introduce stricter green targets. In the more immediate term, President Xi Jinping is thought to want to reduce air pollution in Beijing in time for its hosting of the 2022 Winter Olympics. 

Despite the push, almost half of China’s regions have missed the new energy consumption targets.

This is partly because demand for electricity has jumped following the easing of Covid-19 restrictions, sending coal, gas and oil prices higher. Faced with rising energy costs and power control measures, factories have had to reduce output, which in turn has hit commodity prices. 

In an attempt to tackle rising oil prices, China recently made the decision to release some of its strategic reserves for the first time. 

Similarly trying to tackle rising metals prices, China’s National Food and Strategic Reserves Administration recently announced that it would undertake its fourth round of sales from strategic reserves. On 9 October, 30,000 tonnes of copper, 50,000 tonnes of zinc and 70,000 tonnes of aluminium will be sold. 

Further reading: Crypto market shrugs off latest China crackdown

Further reading: Natural gas prices continue to rise

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