Nickel market seen in surplus until at least 2027 – Macquarie
hellenicshippingnews.com
in Commodity News 01/06/2023
The global nickel market is expected to face a surplus every year through to at least 2027, as output ramps up quickly in Indonesia, said a Macquarie analyst.
Indonesia in recent years has witnessed rapid growth in output of the metal used in making stainless steel and batteries for electric vehicles (EV) due to its abundant nickel resources and government policy to encourage domestic processing.
The nickel market could see a surplus of 142,000 tonnes this year, up from 111,000 tonnes in 2022 when the world saw a record supply growth, most of which came from Indonesia, data presented by Jim Lennon, an analyst at Macquarie, showed.
The surplus is expected to expand to 187,000 tonnes in 2026 before easing to 40,000 tonnes in 2027, with most of the supply increase in lower-grade “Class 2” nickel, Lennon told the SMM Indonesia Nickel-Cobalt conference in Jakarta.
The International Nickel Study Group (INSG) also saw a big primary nickel surplus this year, estimated at 293,300 tonnes, up from an overhang of 105,200 tonnes in 2022, INGS research director Ricardo Ferreira told the same conference.
“Last year Indonesia produced about 1.45 million tonnes of nickel units, but if we add up all the projects, we can identify – in terms of existing planned and also under construction projects – over 5 million tonnes of capacity,” Lennon said.
“To put that into context, the total nickel mining last year was 3 million tonnes,” he added.
The Indonesian production could reach over 75% of world supply by 2029, which will likely pose a challenge for nickel users in Europe and the United States where governments are seeking to localise and diversify supply sources, Lennon said.
Nickel is still mainly used in the stainless steel sector, but the demand for the metal from the battery sector is steadily rising, from 8% in 2020 to 15% of total nickel consumption last year, INSG’s Ferreira said.
Nickel demand from the battery sector is likely to jump almost four folds by 2030 to 1.69 million tonnes, from 484,000 tonnes in 2022, Macquarie’s Lennon said.
However, prices of nickel sulphate – a chemical used in making EV batteries – are at a larger discount to the global benchmark nickel price on the London Metal Exchange CMNI3, indicating an oversupply, he said.
Source: Reuters (Reporting by Fransiska Nangoy in Jakarta; Writing by Mai Nguyen; Editing by Sharon Singleton) |
