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Nickel prices have been increasing lately, influenced significantly by the supply constraints and heightened demand across various industries. The most pressing issue affecting nickel prices is the ongoing shortage of nickel ore, particularly in Indonesia. Indonesia, a major player in the global nickel market, has faced delays in the allocation of mining licenses, which has disrupted operations considerably. This obstruction has led to reduced operations at several nickel smelters, some of which had to curtail or suspend activities. Although some smelters resumed operations post-maintenance, their output remains compromised due to the scarcity of raw materials.

Rising Demand from the Stainless Steel Sector

The demand for stainless steel has surged more and earlier than the expected time, and is showing signs of sustaining. Global steel demand continues to climb, prompting manufacturers in China, Taiwan, and other Asian countries to increase steel prices for the upcoming months. Given nickel prices are related to steel price trajectories, nickel prices have been rising, as well.

Political Factors and Market Volatility

Another crucial element influencing nickel prices is the political unrest in New Caledonia. Known for contributing about 6% to the global nickel output, New Caledonia experienced pro-independence protests that severely disrupted nickel production. This led to a sharp 7% increase in nickel prices on the London Metal Exchange, where it reached $21,150 a tonne. Although there was a slight retreat in prices, they remained significantly higher than previous levels, underscoring the impact of geopolitical instability on commodity prices.

Global Trade Policies and Market Dynamics

The global trade policies, particularly from the US and the European Union, have surged nickel prices recently. The US government escalated its Section 301 tariffs on steel and aluminum imports from China from as low as 0-7.5% up to 25%. This substantial increase in tariffs is a strategic offset against the dumping of underpriced steel and aluminum products into the US market, a practice that undermines local producers. These higher tariffs are intended to level the playing field for American producers by making Chinese imports less economically attractive. This has therefore supported nickel prices along with the global steel and aluminium prices.

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Simultaneously, the European Commission has reinforced its stance against unfair trade practices by extending anti-dumping measures, specifically against stainless steel tubes from China. Through the Commission Implementing Regulation (EU) 2024/1475, definitive anti-dumping duties ranging from 48.3% to 71.9% have been imposed on these imports, aiming to protect European manufacturers and ensure fair competition.