Production of batteries for electric vehicles and the stainless steel, paint and alloy-based industries are likely to be affected as prices of key raw material, nickel has spiked over 100% in the past few days. The Russia-Ukraine crisis has led to a nickel shortage which, in turn, led to a massive spike in prices.

On Tuesday, nickel prices surged as high as 111% to trade briefly above $100,000 per tonne. The unprecedented surge in price led the London Metal Exchange (LME) to suspend trading in non-ferrous metal.

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However, prices corrected soon after on Tuesday itself. Russia is one of the largest producers of metal in the world. New and harsher sanctions against Russia for its invasion of Ukraine have raised concerns over disruption in global supplies.

Rising nickel prices have halted Tesla and other automakers’ plans of introducing more affordable vehicles. The major advantage of using nickel in batteries is that it helps deliver higher energy density and greater storage capacity at a lower cost. Several automakers are investing heavily in Electric Vehicles. Ford Motors recently announced to invest $50 billion till 2026 in the EV segment. US-based automaker Jeep released the first images of its upcoming electric SUV and announced that it will launch in 2023.

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Last week, Sony and Honda announced a strategic partnership to form a new company that aims to build a new era of mobility and mobility services.

Nickel prices have been very volatile this year, spiking more than 200% year to date. Shortage of supply and demand for nickel from the EV industry is supporting prices, said Anuj Gupta, VP Research at IIFL Securities.

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The EV and steel industries majorly use nickel as raw material and the increased price will drag down their margins, according to Kshitij Purohit, Lead of Commodities and Currencies at CapitalVia Global Research.