Nickel-Copper Price Reversal Sparks Commodity Market Upheaval
The relationship between nickel and copper prices has been turned on its head in commodity markets. For over 2000 years, gold consistently cost about 15 times as much as silver. The ratio between copper and oil prices is also seen as an indicator of seismic shifts in the world economy.
In a similar vein, nickel has traditionally been priced at a premium to copper since it started being mined on a large scale in the mid-19th century. However, this 'law of nature' is now breaking down.
The shift is largely due to the energy transition and uncertain supplies of copper. Nickel prices are struggling because miners have unlocked vast new resources in recent years, much like they did with iron ore and aluminium before.
Copper, on the other hand, has seen its price surge to a record high last month due to supply constraints. The largest stream of newly mined nickel is not refined metal but low-grade 'nickel pig iron', which dominates trade in Indonesia.
Indonesian miners receive around $14,500 a tonne for the metal contained in their NPI, while copper miners sell concentrates that smelters pay them the LME price minus processing charges. These charges have recently turned negative, implying a price for copper miners of around $15,112 a tonne, some $612 a tonne more than nickel miners.