Posted on 06 Oct 2023
London Metal Exchange (LME) nickel price is forecast to average about $22,000 a tonne in 2023, according to the Australian government’s latest Resources and Energy quarterly report seen by Kallanish.
A near-term global surplus is forecast to see prices fall further – to around $20,200/t in 2024 – before a tighter global supply and demand balance helps prices recover to roughly $21,500/t by 2025. Yet, an oversupply in the global nickel market is expected to persist over the outlook period driven by growth in Indonesian (and some Chinese) mined and refined production.
The existing oversupply in Class II nickel (primarily used for stainless steel) is also expected to spill over into the battery-grade nickel market over the outlook period (2023-2025).
After a peak at $30,000/t in January, the benchmark LME nickel price has declined throughout 2023, averaging around $20,400/t in August.
The fall in prices reflects an increasingly challenging global macroeconomic environment in the second half of the year, as well as specific structural changes underway in the global nickel market.
Meanwhile, global refined nickel consumption is forecast to grow to 3.5 million t by 2025, at an average annualised rate of 5.9%. This growth in demand is expected to be driven by increasing stainless steel output over the next few years.
Global mined nickel production, on the other hand, is forecast to rise at an annualised rate of 5.8% to 2025 to reach 3.8m t. Indonesian output should grow from 1.6m t to more than 2.2m t over the same period, and represent close to 60% of global output, the Australian government says.
Refined nickel output, meanwhile, is anticipated to rise to 3.6m t in 2025, globally. China and Indonesia will account for the vast majority of this increase, with each expected to add 400,000-500,000 t of new capacity in the next few years.
Weaker prices over the outlook period are expected to see Australia’s nickel export earnings fall from AUD 5 billion ($3.18 billion) in 2022–2023 to AUD 4.3 billion in 2023–2024. New production capacity in Australia is then expected to see a rebound in forecast earnings to AUD 4.5 billion in 2024–2025.
Source:Kallanish
