While the nickel price has continued its downward trend towards...

While the nickel price has continued its downward trend towards $US20,000 per tonne (t) in recent weeks, the long-term outlook for the base metal is much brighter.


The price for three-month nickel on the London Metal Exchange (LME) closed at $US22,706 ($33,903)/t on April 5, having been as high as $US31,118/t in early-January.

This has coincided with Fitch Solutions reducing its nickel price forecast for 2023 from an average of $US30,000/t to $US26,000/t amid rising production volumes.

“After being driven up to record highs following the Russian invasion of Ukraine in late February 2022, over fears of reduced exports from Russia, prices fell back but remain elevated compared to pre-pandemic levels,” Fitch said in a recent report.

“Three-month LME nickel futures prices have averaged $US26,152/t in the year to date, higher than the average of $US25,617/t seen in 2022.

“Nevertheless, prices have come down from the high seen on January 3 of $US31,118/t … with the decline attributed to an oversupply of nickel in the global market alongside company plans to boost nickel production in 2023.”

Fitch said that Indonesia and China would be the main contributors to rising nickel production, including Tsingshan potentially bringing a new 50,000-tonne-per-annum Indonesian smelter online this year.

Indonesia has been increasing its investment in its downstream nickel industry after unprocessed nickel ore exports were banned by the country in January 2020.

Fitch forecasts Indonesian nickel production to rise by 20 per cent year-on-year in 2023 to reach 518,000t, having already experienced a 31 per cent year-on-year increase in 2022.

But while supply is increasing, there are some positive signs on the demand side of things.

“Despite a downwards revision to our forecasts, we note that prices in 2023 will remain elevated compared to historic levels due to growth in stainless steel and electrical vehicle (EV) production in 2023 – two key refined nickel consuming industries,” Fitch said.

The EV industry will be a key driver of nickel demand in the years to come, and Fitch forecasts the base metal to be averaging $US27,000/t by 2024.

“Beyond that, we expect nickel prices to increase at a faster pace in 2028, rising to $US29,000/t as the market goes into deficit on the back of surging demand for nickel along with the rise in the production of EV batteries,” Fitch said.

“Upwards pressure on prices will be partially offset by the continued ramp-up of output in Indonesia, driven by technical advances in converting lower-grade Class 2 nickel ore that is abundant in Indonesia into higher-grade Class 1 nickel that can be used in the battery industry.

“We forecast prices to reach $US32,000/t in 2032 as demand growth outpaces that of supply with the market deficit climbing to 250,600t, putting upwards pressure on prices.”

https://www.australianresourcesandi...ickel-could-average-us32000-in-years-to-come/