Middle East

The UAE economy looked set for faster growth in the latter part of 2021 after a relatively slow start to the year. Relaxation of travel restrictions in key tourism markets - including the UK and Saudi Arabia - should support a strong recovery in the UAE’s travel and hospitality sectors over the high season, while Expo 2020 is expected to result in a boost to consumption expenditure over the next two quarters.

Nickel is a key element used in cathodes for electric car batteries, and many believe demand from this sector will increase significantly in the coming decades. Despite this speculation around demand from the battery segment, stainless steel production - which accounts for around 70% of total nickel demand - will continue to be the key driver for years to come.

LME three-month nickel climbed to US$ 21,025 per tonne on November 23 - its highest level since May 13 2014 and a 9.6% increase from six days earlier when nickel had been at US$ 19,187.50. On November 26, the price fell back to US$ 20,062.50 per tonne as the discovery of COVID’s Omicron variant shook market sentiment. However, nickel resumed its upward direction in mid-December, hovering around and then above the key US$ 20,000 per tonne threshold before pressing on to almost US$ 24,000 in the second half of January.

Nickel emerged as the outlier among the tradeable LME base metal contracts. From a low of US$ 17,805 per tonne on October 5, three-month metal jumped more than 18% to the US$ 21,025 high mentioned for late November. In contrast, the three-month aluminium contract was on a downward trajectory, falling from a high of US$ 3199 per tonne on October 18 to a low of around US$ 2500 on November 5 as a result of low demand, with vehicle manufacturers affected by semiconductor shortages content to limit purchases through to the end of the year. For aluminium too, however, prices regathered momentum in mid-December and have surpassed US$ 3200 per tonne in early February.