The Nickel Industries share price has tumbled 36% since early March. What’s going on?

Why is Nickel Industries having such a horrible time lately?

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Key points

  • The Nickel Industries share price has plunged by 36% since early March 
  • Investors have been selling the shares following the short squeeze drama in March 
  • Nickel prices have also declined by 46% since early March 

The Nickel Industries Ltd (ASX: NIC) share price fell by 8.6% during today’s market sell-off.

At the close on Tuesday, the Nickel Industries shares were worth $1.07 each.

This added insult to injury, with the nickel producer’s share price now down 36% since the market close on 7 March. That day, the share price hit a 2022 high of $1.65. It’s been downhill ever since.

By comparison, the S&P/ASX 200 Index (ASX: XJO) has dropped 5% since 7 March.

Let’s take a look at what is happening with the Nickel Industries share price.

Nickel prices plunge

Nickel Industries shares sank in the fall-out from the short squeeze on nickel in early March.

The price of nickel hit $100,000 on the London Metal Exchange before plunging. Chinese giant Tsingshan Group was reportedly caught up in the short squeeze drama.

Tsingshan Group’s subsidiary Shanghai Decent had an 18% stake in Nickel Industries, prompting fears of sales contract terminations.

However, following discussions with Tsingshan and Shanghai Decent, Nickel Industries informed the market that operations at its nickel projects were unaffected.

Nickel Industries is not the only ASX nickel share to suffer since early March. The Panoramic Resources Ltd (ASX: PAN) share price has slipped 26% since the market close on 7 March. IGO Ltd (ASX: IGO) shares have also descended 16% in this time frame.

Since 8 March, the nickel price has dived 46% according to Trading Economics data. Nickel prices have returned to levels seen prior to the short squeeze.

In early June, Goldman Sachs analysts Nick Snowdon and Aditi Rai predicted nickel prices will rise 20% this year before pulling back due to “fundamental pressures”.

What else is happening at Nickel Industries?

Nickel Industries recently changed its name from Nickel Mines to Nickel Industries. This followed approval from shareholders at the company’s AGM in late May.

The company has an 80% interest in the Hengjaya, Ranger, and Angel nickel projects in Indonesia. Nickel Industries has also signed an agreement for a 70% interest in the Oracle nickel project.

The company reported record quarterly results in late April, providing the Nickel Industries share price with a nearly 14% boost between 27 and 29 April.

Nickel Industries produced 11,166 tonnes of nickel for the quarter, a 10.7% increase. A record EBITDA of US$81.7 million was also achieved, up nearly 19%.

Nickel Industries is planning to become a top 10 global nickel producer in the future. It outlined its growth plans in a recent presentation to the Bank of America Conference in Florida.

The company highlighted its Oracle acquisition, saying it will add “significant scale” and diversify the company’s production footprint.

Nickel Industries share price snapshot

The Nickel Industries share price has risen by 2.4% in the past year. It has fallen 27% year to date.

For perspective, the ASX 200 has tumbled 9.4% in the past year.

Nickel Industries has a market capitalisation of $3.18 billion based on today’s closing share price.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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