Trade tensions between the U.S. and Chinac have weighed on metal prices this year.
In the base metals sector, copper and zinc are down 13% and 22% for the year, respectively.
Precious metals haven’t provided a safe haven, either. Gold is down 8%. Platinum has fared even worse with a 12% tumble.
The dips in copper and gold could end up being great buying opportunities for long-term investors. But shorter-term opportunities seem scarce for metal investors.
However, a Chinese firm is making a huge bet on one metal. Here’s why you should pay attention…
The Humble Metal at the Center of the EV Revolution
The electric vehicle (EV) revolution is teasing investors with the promise of new opportunities.
Some believe it will upend the resource market as we know it. Mass adoption could spell the end for oil, putting metals like lithium, cobalt and copper in the spotlight.
But EVs’ need for another base metal has been overlooked — until recently. That metal is nickel.
Nickel has been used to make stainless steel or mint coins, but it also plays an important role in EV batteries. And its amount used in lithium-ion batteries could grow from 33% to 80% by 2020.
Elon Musk, the CEO of Tesla, had this to say about the humble metal: “Our cells should be called nickel-graphite, because primarily the cathode is nickel.”
Even before the kickoff of the EV revolution, nickel supplies are dwindling. Inventories fell the past two-years, with this year promising another deficit.
Gelin Dahua is the Chinese firm I alluded to earlier. It took on a record long position in nickel recently. The firm started boosted holdings in May.
This move comes at the same time China promises to lead the EV revolution. The prospect of millions of Chinese buying EVs could be why Gelin Dahua is long nickel.
Investors looking for exposure to nickel should consider the iPath Bloomberg Nickel Subindex Total Return ETN (OTC: JJNTF). This fund tracks the price of nickel using futures contracts.
Internal Analyst, Banyan Hill Publishing