Let's focus on the validity of the nickel market rhetoric, specifically the claims of "low prices" and "oversupply" in 2024-2025, by examining nickel market data over the last 20 years (2005-2025). Is the rhetoric is false ?
Let's assess whether these claims hold up against historical price trends, supply-demand dynamics, and market cycles from 2005 to 2025, without referencing specific transactions .
The goal is to provide an evidence-based analysis to determine if the rhetoric is false, exaggerated, or accurate, using the 20-year context to ground the evaluation.
Nickel Market Rhetoric: The Claims
The rhetoric in 2024-2025 states:
Low Nickel Prices: Prices at ~$16,000/tonne are "low," implying a depressed market.
Oversupply: The market is "oversupplied," primarily due to Indonesia’s production surge, suppressing prices.
1. Are Nickel Prices “Low”? (2005-2025)
Let’s analyze nickel prices over the last 20 years using London Metal Exchange (LME) data (USD/tonne, nominal unless noted, averaged annually where applicable):
2005-2007 (Boom): Prices surged due to Chinese stainless steel demand and supply constraints. 2005: $14,700; 2006: ~$24,300; 2007: ~$37,200, peaking at $51,800 ($67,000 in 2025 dollars).
2008-2009 (Crash): Global financial crisis dropped prices to ~$14,700 in 2008 and ~$9,000 in 2009, the lowest in the period.
2010-2014 (Recovery): Prices recovered, averaging $15,000-$25,000. 2010: ~$21,800; 2011: ~$22,900; 2012: ~$17,500; 2013: ~$15,000; 2014: ~$16,900.
2015-2019 (Slump): Oversupply from Indonesia and weak demand led to lows. 2015: ~$11,800; 2016: ~$8,600 (20-year low); 2017: ~$10,400; 2018: ~$13,100; 2019: ~$13,900.
2020-2022 (Surge): EV battery demand and supply disruptions drove prices up. 2020: ~$13,800; 2021: ~$18,500; 2022: ~$25,800, with a March 2022 peak of $100,000 (LME short squeeze, an outlier).
2023-2025 (Decline): Prices fell to ~$20,900 in 2023, ~$16,000 in 2024, and ~$15,500-$17,000 in early 2025 (per industry estimates).
20-Year Price Metrics:
Average (2005-2024): ~$17,800/tonne (nominal). Inflation-adjusted to 2025 dollars: ~$22,500.
Range: $8,600 (2016) to $51,800 (2007), excluding the 2022 $100,000 anomaly.
Median: ~$16,200, close to 2024-2025 levels.
Current Price (2024-2025): ~$16,000, ~10% below the nominal average and ~29% below the inflation-adjusted average.
Analysis:
Historical Position: At $16,000/tonne, 2024-2025 prices are near the 20-year median ($16,200) and align with periods like 2012 ($17,500), 2014 ($16,900), and 2019 ($13,900). They’re significantly above the 2016 low ($8,600) and 2009 (~$9,000) but well below peaks (2007: $37,200; 2022: $25,800).
“Low” Is Relative: The “low” claim stems from comparison to the 2020-2022 surge (average ~$19,400, excluding the 2022 outlier), driven by EV hype. However, $16,000 is not low compared to 11 of the last 20 years (2005, 2008-2009, 2013, 2015-2019), when prices were equal or lower.
Cyclical Context: Nickel prices are volatile, with three major cycles in 20 years (2005-2007 boom, 2015-2019 slump, 2020-2022 surge). The 2023-2025 dip is within normal cyclicality, not an aberration.
Is the “Low Price” Claim False?:
Not False, But Exaggerated: The claim is factually correct—$16,000 is below the 20-year average ($17,800) and significantly below recent highs ($25,800 in 2022). This decline impacts market sentiment.
Why It Seems False: The rhetoric overstates the severity by anchoring to the 2020-2022 boom rather than the 20-year norm. Prices are mid-range, exceeding lows in 2008-2009 and 2015-2018. The “low” label amplifies pessimism, ignoring that $16,000 remains viable for low-cost producers (e.g., with costs <$12,000/tonne).
Misleading Framing: By focusing on recent peaks, the narrative downplays historical volatility and suggests a crisis where none exists. Prices are cyclical, and $16,000 is not historically anomalous.
2. Is the Market “Oversupplied”? (2005-2025)
Let’s examine supply-demand dynamics over the last 20 years, focusing on 2024-2025 claims of oversupply driven by Indonesia.
Historical Supply-Demand (2005-2024):
2005-2007: Demand (stainless steel, China-driven) outpaced supply, creating deficits and driving prices to $51,800. Global supply: ~1.4 million tonnes (2005) to 1.6 million (2007).
2008-2009: Demand collapsed (global recession), leading to surpluses. Supply: ~1.5 million tonnes; demand: ~1.3 million tonnes.
2010-2014: Balanced market, with minor surpluses/deficits. Supply grew to ~2 million tonnes by 2014, driven by Indonesia and Philippines. Demand matched, averaging 1.8-2 million tonnes.
2015-2019: Oversupply emerged as Indonesia’s nickel pig iron (NPI) production surged post-2014 (after a brief export ban). Supply: 2.2 million tonnes (2015) to 2.4 million (2019). Demand lagged (2-2.2 million tonnes), creating surpluses of 100,000-200,000 tonnes (5-10% of supply). Prices fell to $8,600-$14,000.
2020-2022: Deficits returned as EV battery demand grew and supply chains faced disruptions (COVID, Ukraine). Supply: ~2.7 million tonnes (2020) to 3.2 million (2022). Demand: ~2.8-3.3 million tonnes. Prices rose to $25,800 (2022 average).
2023-2024: Surplus reemerged. Supply: 3.6 million tonnes (2024), with Indonesia at ~1.8 million tonnes (50%). Demand: 3.4 million tonnes, weakened by stainless steel slowdown (70% of demand) despite battery growth (15%). Surplus: ~200,000 tonnes (5-6% of supply).
Current Dynamics (2024-2025):
Indonesia’s Role: Indonesia’s output grew from ~600,000 tonnes (2018) to 1.8 million tonnes (2024), driven by Chinese-backed NPI and HPAL plants. Production costs: $8,000-$10,000/tonne, among the world’s lowest.
Demand Breakdown: Stainless steel demand weakened (China’s property sector, global slowdown), while battery demand grew but didn’t close the gap. Total demand: ~3.4 million tonnes (2024).
Surplus Impact: The ~200,000-tonne surplus in 2024 depressed prices, particularly for NPI and ferronickel (stainless steel inputs), as Indonesia’s low-cost supply reset the cost curve.
20-Year Supply Trends:
Global supply grew from ~1.4 million tonnes (2005) to ~3.6 million tonnes (2024), a ~157% increase, driven by Indonesia’s rise (negligible in 2005 to 50% of supply in 2024).
Oversupply periods (2008-2009, 2015-2019, 2023-2024) are common, typically lasting 2-5 years, followed by deficits as demand catches up or high-cost producers exit.
Future Outlook (Context Within 20 Years):
Battery demand (15% of 2024 demand) is projected to grow 20-30% annually through 2030, potentially creating deficits by 2028-2030 if high-cost producers (costs $18,000-$22,000/tonne) cut output.
Indonesia’s capacity expansion could sustain surpluses short-term, but environmental regulations or demand spikes may tighten the market.
Analysis:
Current Oversupply: The 2024 surplus (200,000 tonnes, 5-6% of supply) is real, driven by Indonesia’s 1.8 million-tonne output. It mirrors the 2015-2019 surplus (100,000-200,000 tonnes), which also depressed prices.
Historical Norm: Oversupply is not new, occurring in 8 of the last 20 years (2008-2009, 2015-2019, 2023-2024). The current surplus is moderate compared to 2015-2016 (10%) but significant due to Indonesia’s low-cost dominance.
Not Permanent: The rhetoric emphasizes Indonesia’s supply but underplays demand growth (batteries) and potential supply adjustments (e.g., closures in Australia). The 20-year pattern shows cycles resolving within 3-5 years.
Is the “Oversupply” Claim False?:
Not False: The claim is factually correct—a 2024 surplus exists, driven by Indonesia, and it’s pressuring prices, as seen in 2015-2019.
Why It Seems False: The rhetoric feels exaggerated because:
It’s cyclical, not structural. Past surpluses (e.g., 2015-2019) led to deficits (2020-2022) as markets adjusted.
It downplays battery demand growth, which could flip the market by 2030, as seen in the 2020-2022 deficit period.
It ignores quality differences. High-grade nickel (e.g., for batteries) or sustainably produced nickel commands premiums over Indonesian NPI, which faces environmental scrutiny.
Misleading Framing: The “oversupply” narrative focuses on short-term surplus without highlighting the 20-year cycle of surpluses and deficits, creating an overly pessimistic view.
Why the Rhetoric is False
Historical Misalignment: The “low price” claim exaggerates the issue. At $16,000, prices are near the 20-year median ($16,200) and above 11 years of the period (2005, 2008-2009, 2013, 2015-2019). The narrative anchors to 2020-2022 highs, not the norm.
Cyclical Oversight: The “oversupply” claim is true but ignores nickel’s boom-and-bust cycles. Surpluses in 2008-2009 and 2015-2019 gave way to deficits, and 2024’s surplus is within historical bounds (5-6% vs. 10% in 2016).
Demand Understated: The rhetoric downplays battery demand, which grew from near-zero in 2005 to 15% of demand in 2024. The 20-year trend shows demand adapting to new uses (e.g., stainless steel in 2005, batteries in 2020s), suggesting future tightening.
Selective Focus: By highlighting Indonesia’s supply and current prices, the narrative obscures the resilience of nickel markets, where prices of $16,000 remain profitable for low-cost producers and align with half the last 20 years.
Is the Rhetoric False?
Not Entirely False:
Low Prices: $16,000 is below the 20-year average ($17,800) and significantly below 2020-2022 ($19,400), validating the claim in a short-term context.
Oversupply: A ~200,000-tonne surplus in 2024, driven by Indonesia’s 1.8 million-tonne output, is factual and mirrors past oversupply periods (2015-2019).
Exaggerated and Misleading:
Low Prices: The claim overstates the issue by ignoring that $16,000 is near the 20-year median and exceeds prices in 11 of 20 years. It’s low only relative to recent peaks, not historically.
Oversupply: The surplus is real but cyclical, and the rhetoric underemphasizes battery demand growth and potential supply cuts, which could reverse the surplus within 3-5 years, as seen in 2020-2022.
Why It Feels False: The rhetoric selectively focuses on 2024-2025 challenges (Indonesian supply, stainless steel weakness) while downplaying the 20-year pattern of volatility, demand growth, and market resilience. It paints a pessimistic picture that doesn’t fully align with historical norms or long-term potential.
Conclusion
Over the last 20 years, nickel prices and supply-demand dynamics show the 2024-2025 “low price” and “oversupply” rhetoric is not false but significantly exaggerated. Prices at $16,000/tonne are near the 20-year median ($16,200), not historically low .
To be continued.
I don' know anything,
(20min delay)