LME Ni futures peaked at US$51,750/t in May, 2007 (~US$23.50/lb).
Using your example target price for Ni of, say US$15/lb. equates to US$33,000/t.
LME Ni futures traded at, or above, US$33,000/t for a total of 35 weeks during the final stages of the bubble that ended in mid-2007. This consisted of 24 weeks during the final run-up leading into the May, 2007 all-time high (US$51,750/t), followed by 11 weeks of sharp downtrend after the top, before it breached below US$33,000/t.
Interestingly, and probably co-incidentally, this US$33,000/t price level acted as a major point of resistance that was re-tested during two periods between Sept-Nov, 2007 and then again (briefly) in March, 2008. During those periods, price briefly pierced above US$33,000/t (it got to ~US$34,000/t). Following the March, 2008 re-test it collapsed, along with almost all other western capital/equities markets during that year (the GFC). Ni prices then bounced off the Nov/Dec, 2008 GFC lows for a bullish run to April, 2010 (~US27,500/t) and then Feb/March, 2011 (~US29,000/t), Ni hasn't been anywhere near any of those prices since then.
As you said, the top was 10 years ago. It sounds like a long time, but it's not that long ago when you consider that it was a multi-generational bull market that was borne of a demand shock (China) in an industry that requires long lead times to bring on material global supply increases, in order to accommodate the new and unprecedented demand. And now we are awash with the stuff and have been for several years. Why? Because China's demand eased, but (more importantly) a massive wave of new supply swamped the market, belting the balance pendulum in the other direction (i.e. massive under-supply shifted to massive over-supply). Massively reduced prices are the market's balancing mechanism.
And to compound the over-supply problem we also have to contend with global interest rates at multi-generational lows. So capital deployment (investment) decisions are being distorted much more so that during the "cleansing" phases of previous cycles, which, in turn, delays the process of re-balancing the global supply/demand equation. The supply-side bankruptcies that have so often featured in previous cycles are much fewer this time around, leaving more producers to participate in an already over-crowded market.
Why raise these macro economics points? Because we need to understand the forces that gave rise that extraordinary bull market. We then need to ask ourselves, bearing in mind the current documented global warehouse stockpiles (and God knows whatever undocumented "dark" inventories also remain), how prices could get up to, and remain over, our target of US$33,000/t any time soon.
It would require another shock. Demand-side or supply-side, or some kind of combination. (I'm not fussy.)
And... (this is important, so wake up, kiddies)
The shock would need to be AWESOME. It would need to be
bigger than the last one! Because the last one caught the supply side napping (which is why prices went so high in the first place). But the producer ecosystem isn't sleeping this time. It's ready, willing and more than able to supply any demand increases - even significant ones. So not only would the shock need to exist, but it's scale would also need to be quite shocking, so as to completely overwhelm the existing (increased) global production capacity that is "just waiting for things to improve" (does this remind us of any companies we might know?) so as to create another astounding global supply scarcity event.
They're called multi-generational shocks for a reason. 10 years is nothing, sadly.
Finally, Li-Ion battery-powered cars are being touted as the next big thing. We should ask ourselves, will the likely related demand increase for Ni be gradual or shock-like? Because if we want prices to improve
materially (i.e. to
maintain sustained prices of over US$33,000/t), then we
don't want a gradual demand increase; we want another shock in which Ni producers cannot react quickly enough to fulfill the increased demand.
It's an interesting exercise to do the theoretical "
what would it take to..." scenario, but I don't think there's much of a chance of that particular scenario playing out any time soon.
Z
(20min delay)