(Yicai Global) March 9 -- The recent surge in the price of nickel, a vital raw material used to make electric car batteries, has led to widespread concerns about the knock-on effect on the cost of new energy vehicles, but the price spike is unlikely to last a long time, according to the secretary-general of the China Passenger Car Association.

The hike in the price of nickel is mainly due to speculation and should fall back in the short term, Cui Dongshu said yesterday. It will put pressure on car companies, but it won’t have a big impact on China’s new energy vehicle sales.

The London Metal Exchange halted trading yesterday on all nickel futures contracts following unprecedented increases in the price of the metal. Futures surged over three-and-a-half times from March 7 to USD101,365 per ton. The main nickel futures contracts in Shanghai jumped 17 percent to CNY267,700 (USD42,377) per ton today.

Should nickel prices continue to rise, it will become difficult for the new energy industry to afford it, investment bank China International Capital Corporation said. A USD30,000 jump to USD50,000 per ton will raise the cost of a vehicle with a 60 kilowatt-hour battery by about CNY10,000 (USD1,582).

However, worldwide inventories are running low and with the uncertainties of Russian output, which accounted for 6 percent of global production of pure nickel last year, continued high demand is pushing up prices, Beijing-based CICC said.

Nickel is not the only metal used in electric car batteries that is getting more expensive. Lithium now costs more than CNY500,000 (USD79,127) per ton and aluminum is at a record high, according to Hong Kong-based TF International Securities.

Editor: Kim Taylor