While recyclers generally report a
better-than-expected start to the year, persistent surpluses, falling prices,
and geo-political and financial risks continue to cloud the outlook.
In a reversal of last year’s performance, nickel prices in 2023
have been underperforming the other major base metals at the London Metal
Exchange. Having started the year around US$ 31 000 per tonne, LME cash prices
were trading below US$ 23 000 by early March. While inventories in LME
warehouses remain tight at less than 45 000 tonnes, Class 1 LME stocks
represent a declining share of the global supply chain.
According to
Macquarie Research, world nickel production increased 16.6%, or by 444 000
tonnes, to 3.13 million tonnes in 2022, the largest annual production increase
on record. Given the significant disparity between the production levels of
Class 1, Class 2 (including nickel pig iron), and nickel intermediates, the
Macquarie analysts note ‘the importance of analysing nickel markets in specific
submarkets has never been more important with prices of finished nickel
products performing radically differently in 2022’.