Healthy demand from stainless steel mills and electric vehicle battery makers is expected to underpin nickel prices over coming months, but rising supplies from top producer Indonesia are likely to weigh next year.
Benchmark nickel prices on the London Metal Exchange, at $19,500 a tonne, are up more than 20percent since April and at their highest since February.
A few months ago, expectations had been for surpluses in the second half of this year, but now shortages are more likely.
“This year has seen one of the most remarkable turnarounds in nickel consumption, it has been driven by booming conditions in the stainless steel and battery markets,” said Macquarie analyst Jim Lennon.
“But the relentless rise in Indonesian production, combined with an expected slowdown in the pace of nickel consumption growth should tip the market into over-supply in 2022/23.”
Macquarie expects demand to rise to 2.8 million tonnes this year, a rise of 16percent from 2020, and a deficit of 83,000 tonnes. In March it had predicted nickel demand growth at 10.6percent. Production of 300-series stainless steel containing 8percent-9percent nickel jumped 36percent in the first half of 2021 compared with the same period last year.
Stainless accounts for around 70percent of global nickel consumption, while electric vehicle batteries consume less than 10percent, but the latter number is expected to rise alongside electric vehicle sales as the world moves to cut carbon emissions.
Supplies are under pressure this year due to disruptions at nickel mines in New Caledonia, Russia and Canada. Analysts estimate the market lost around 60,000 tonnes of nickel due to these disruptions.
Source : https://www.brecorder.com/news