New research with 150 European pension funds with a combined AUM of USD213 billion, reveals that the majority (84 per cent) think nickel’s growing use in lithium-ion batteries and the accelerated roll-out of electric vehicles will drive the price of the metal higher in the long-term.
The study, which was carried out by Global Palladium Fund (GPF), the provider of industrial and precious metal Exchange Traded Commodities (ETCs), shows that this bullish outlook means that 45 per cent of funds are looking to increase their allocation to nickel compared to 27 per cent who expect to reduce it.
Known for its attractive properties in the steel industry, nickel has come into its own over the last few years, in a large part due to demand from the electric battery sector. In 2020, the industry accounted for around 6 per cent of global demand for nickel, but this is expected to rise to 36 per cent by 2030 (Roskill 2021). Only around 30 per cent of annual Nickel mine supply is high grade nickel and can be used in the electric battery industry.
Alexander Stoyanov, Chief Executive Officer of GPF, says: “One of the key attractions of physical nickel is that it provides investors direct exposure to electrification and the zero-carbon transition themes.”
In terms of the outlook for nickel, over 50 per cent of pension funds expect it to end the year up over 12 per cent from mid-April. Some 11 per cent anticipate it will be up to 6 per cent higher by the end of this year when compared to its price in mid-April and 33 per cent think it will be between 6 per cent and 12 per cent higher.
The Global Palladium Fund (GPF), established by MMC Norilsk Nickel, the world’s largest producer of palladium and high-grade nickel and a major producer of platinum and copper, has launched six physically-backed metal ETCs in Europe this year – copper, nickel, silver, gold, platinum and palladium. In an industry first, the ETCs use Blockchain technology for transparency and security of the metals backing them.
The GPF nickel ETC, which was launched earlier this month, is the world’s only physically-backed nickel ETC with an annual total expense ratio (TER) of 0.75 per cent. The TER of 0.75 per cent is the all-in-cost for investors, making it the most cost-effective way to gain exposure to the metal; by comparison swap based exchange traded products may charge a lower management fee but end up being more expensive due to hidden swap and licensing fees. The new ETC is listed on London Stock Exchange and Borsa Italiana.
Targeting family offices, wealth managers, institutional and sophisticated retail investors, the ETC will track the spot price of the metals. The metal backing GPF ETC is stored in secure warehouses in Rotterdam.
The metal backing the ETC is sourced from producers and metal suppliers which have confirmed their compliance with the Sustainable Development Goals of the UN 2030 Agenda and other global initiatives in sustainable development and responsible mining. GPF is the only major ETC issuer to make such a pledge.
Stoyanov, says: “Nickel has a fundamental role to play in the fast-growing clean energy revolution thanks to its use in lithium-ion batteries. As a result, investors are bullish about its prospects and the role it has in investment portfolios going forward. Our new physically-backed nickel ETC provides low-cost access to the metal spot price with blockchain technology for transparency and security of the metals backing them.”