An industry expert has revealed that the nickel market might be in a healthier state than originally thought.
In an interview with The Australian Financial Review, senior commodities consultant to Macquarie Capital Europe Jim Lennon said that nickel demand in China was “stronger than most people had in their numbers”.
After visiting the country himself, Lennon discovered that nickel consumers were significantly boosting output and had lower inventories of the commodity than the official numbers reflected.
This all goes to soften the present oversupply issue in the nickel market, believed to be largely led by Indonesia.
“The price coming down was entirely legitimate because there was an oversupply,” Lennon said.
“But I’m saying that the oversupply wasn’t as big.”
Lennon also said that while the Indonesian government is renewing nickel mining licenses, it was not providing extra tonnage to miners. This is leading to an emerging tightness in supply, which may force Chinese producers to look to other nations like Australia.
