Posted on 17 Nov 2023
ING expects nickel prices to remain under pressure in the short term, as a global market surplus builds up and the slowing global economy mutes EV and stainless steel demand, Kallanish reports.
The Dutch financial institution says in a note that nickel prices should, however, remain at elevated levels compared to average prices seen before the historic LME nickel short squeeze in March 2022 due to nickel’s role in the global energy transition.
The metal’s appeal to investors as a key green metal will support higher prices in the longer term, it adds. The forecast is for nickel price to average $18,500/tonne in Q4.
Going forward, the estimate is for prices to remain at $18,500/t in Q1 2024 and $18,700/t in Q2 2024. The annual average for 2023 is currently foreseen at 21,927/t, before dropping to $18,925/t in 2025 and slightly recovering to $19,500/t in 2025.
“We believe this underperformance is likely to continue, at least in the near term, amid a weak macro picture and a sustained market surplus,” ING says.
The analysts add that nickel has been the worst performing metal on the LME so far this year, with prices down more than 40%, and now trading at a two-year low. The key driver for that has been the supply surge from Indonesia, the world’s largest nickel producer.
Meanwhile, China continues to expand its Class 1 nickel output. The country’s refined Class 1 production rose 36% in the first three quarters of the year in response to historically elevated LME prices. The growth comes as EV sales growth slows down and battery materials including nickel remain under a bearish outlook in the near term.
Batteries are estimated to account for almost 17% of total nickel demand, with the bulk consumption still coming from the stainless steel sector.
Source:Kallanish
