Posted on 03 Oct 2024
Australia sees excess global supply as an ongoing downside risk to nickel prices over its outlook period, Kallanish notes.
Australia’s Department of Industry, Science and Resources says in its latest report that a large loss in western producers, will be balanced by emerging and marginal Indonesian producers. This is likely to contain any price increases. The LME nickel price is expected to average $17,400/tonne in 2025, and around $17,800/t in 2026.
However, nickel prices are expected to remain volatile due to short term mismatches in supply and demand, it adds.
Nickel prices fell to $16,200/t in the September 2024 quarter, as Indonesian supply growth outweighed production cuts in the rest of the world. The magnitude of new Indonesian supply growth and downside demand risks limits meaningful price increases over the forecast period.
"While recent cuts in production outside of China and Indonesia should provide some support, weakening demand is likely to see nickel prices remain soft over the rest of 2024. As a result, the benchmark LME nickel price is forecast to average around $17,100/t in 2024," it notes.
Meanwhile, Australia's nickel export volume is expected to fall to 59,000t in 2024-25 and 43,000t in 2025-26, from 158,000t, due to lower production in the country following the temporary suspension of BHP's Nickel West operations.
Weaker prices and reduced production from major mine closures are expected to see Australian nickel export earnings fall by over half to AUD 1.4 billion ($970 million) in 2024–25, and decline further to AUD 1 billion in 2025–26.
Source:Kallanish
