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Update On Norilsk Nickel


  • Nickel prices have been trending lower.
  • Stockpiles have been steady.
  • NILSY shares made a big comeback since the March low.
  • A massive producer with significant country risk.
  • Precious metals are a bonus.
  • Looking for more stock ideas like this one? Get them exclusively at Hecht Commodity Report. Get started today »

On March 11, in an article on Seeking Alpha, I explored the risks and potential rewards of owning shares in the Public Joint Stock Company Mining and Metallurgical Company Norilsk Nickel (OTCPK:NILSY). On that day, NILSY shares closed at $28 on the way to a low of $18.62 on March 18, the lowest level since early 2019.

Meanwhile, many other stocks and commodities fell to levels not seen in years or, in some cases, decades in mid-March. Like the rest of the stock market, NILSY shares have made an impressive comeback over the past two and one-half months. The shares were trading at $31.78 on Friday, May 29.

Commodity prices moved lower along with stocks in mid-March as the worst financial crisis since 2008 gripped markets. Twelve years ago, central banks and governments used monetary and fiscal policies to stimulate the economy, which fueled a rally in commodities. The nickel price rose from a low of $9,755 per metric ton on the LME in early 2009 to a high of $21,780 per ton in 2011. The price more than doubled. In 2020, the level of stimulus combatting the impact of the global pandemic is many times higher than in 2008.

NILSY is a leading producer of nickel in the world. The price of three-month forward LME nickel was trading at just below $12,200 per ton on May 29, down from a high of $14,360 in January. In March, it fell to a low of $11,142 per ton.

If the unprecedented levels of stimulus are going to have a similar effect to what followed the 2008 crisis, the price of nickel and NILSY shares could be heading a lot higher.

Nickel prices have been trending lower

Indonesia is the leading nickel-producing nation in the world. The government put a mineral export ban

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This article was written by

Andrew Hecht profile picture

Andrew Hecht is a 35-year Wall Street veteran covering commodities and precious metals.

He runs the investing group The Hecht Commodity Report, one of the most comprehensive commodities services available. It covers the market movements of 20 different commodities and provides bullish, bearish and neutral calls; directional trading recommendations, and actionable ideas for traders. Learn more.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

The author always has positions in commodities markets in futures, options, ETF/ETN products, and commodity equities. These long and short positions tend to change on an intraday basis.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (20)

Nice article...as usual...

Your timing is very, very unfortunate with the oil spill..

This stock , SHOULD, take a massive pounding in the next several days , and perhaps months depending upon any international push back, negligence , liability and what not....
Meh, I read up a little more on the situation. Yeah, Putin issued a tough statement but this disaster is not something completely unusual - the ecology in the city of Norilsk has always been bad. This is actually a relatively minor oil spill, not some nasty chemical stuff.

So we will see, they cannot fix the city without completely destroying NILSY. I think this is all smoke and mirrors b/c of the virus crisis. But yeah, the stock might drop like a rock and big fines might be issued to help the state. Then again, NILSY is owned by some well-connected individuals...
G.K.Ommander profile picture
Any idea why Norilsk is 9% down today?
see the comment right below
oil spill from one of their outsourcing company
G.K.Ommander profile picture
Oh I see, thanks!
wallstreetbet profile picture
Thanks for the article! it was written before the huge oil spill in Norilsk right?

Nornickel is down 10% today.

There are crazy estimates about the environmental damage caused, ranging from $15 million (WWF) to $80 million (Greenpeace) to $1500 million (Rosprirodnadzor).

The first case is basically nothing to NorNornickel, second case would mean maybe 3-6% drop in revenue for the year. The last case - if $NILSY would have to pay that - would probably mean huge effort and debt increase for the company but it is so huge I think it can survive even that.
G.K.Ommander profile picture
The true damage will be somewhere in between IMHO.
doe putin declaring the spill mean the state wil be contribtuing to the cleanup> Not sure how to handicap the liability

that said, I did open a position yesterday after the spill, looking to buy more on weakness for long term holding , pending clarity on the liability issue
The only railroad bridge supplying Murmansk collapsed a few days ago. That is a major port in northern Russia. NILSY might be affected by this, and not in a good way. The repairs will take a few months...
and huge 21,000 tons of diesel spilled into a Siberian arctic river and contaminated 125 sq miles around Norilsk/ Putin declared state pf emergency and was outraged tie ministry on;y found out 2 days after the spill

the accident was tiggered by tank support pillars sinking, permafrost no longer permafrost due to unusually warm weather, this just points to the reason why many global corporations are assessing their cost exposure to global warming, despite the denying of leaders like US president Trump

beyond the big cleanup effort costs and structural improvements needed at other sites, a criminal negligence case has been launched, the scale of the spill is enroumous, could take $1.5 B and many years to clean up, could be worse than exxon valdez


Wow. I guess the infrastructure in Russia has not been updated since the Soviet times and is slowly collapsing on itself.
gazprom has a lot of very old pipelines, your comment on infrastructure is not completely wrong , may have merit in part, althpough their airports are far better, they have new pipelines to china, etc etc
A good report. I would have signed up for your report. But I am reserved since you didn't shed light on vedanta de-listing news...
The dividend had been more like 10% not 4,67%
NILSY does not produce any Rhodium to speak of.
Rhodium comes from the South African PGM mines.
In the PGM group of metals NILSY produces approx 40% of the worlds Palladium.
The company's recent presentation gives an excellent analysis and outlook for all the metals they produce.
It is the only company that I know of that looks ahead post Covid.
It is a good read not only for NILSY but also for Cu and PGM stocks.
Bankfurt profile picture
Thanks for the update.
Long nilsy
Right now and for foreseeable future something like ALB has a higher "country risk" than NILSY. Just look out your window.
Henry Miles profile picture
@Andrew Hecht

What is the foundation for your statement that their is significant country risk with Russia; why? Thank you.
RIO in Mongolia , FCX in Indonesia.
Now, that is what I call a country RISK.
Putin is a lot smarter than the folks who run the LDCs.
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