Oops! Reality may take time to bring people back to earth but it...

Oops! Reality may take time to bring people back to earth but it always does, eventually. Once again we see that a rush to do things cheaply isn’t a sustainable business plan.

60,000, perhaps even as much as 180,000 less tonnes of new supply on the horizon.

https://www.fastmarkets.com/insights/nickel-investments-in-indonesia-may-slow-on-falling-prices-geopolitical-risk-2024-preview/

As recently as the end of last year, Sumitomo etc saw prices rebounding from 2025. Those projections will need to be recalculated. My take is that the surplus will persist this year but that it will fade sooner than previously forecast & that the market will move towards a supply deficit sooner than expected.

Remembering of course that projections already showed the market heading toward a deficit.

It must surely also serve as a reminder ( potentially a very timely one for the current negotiations ARL is part of ), that the supply vs demand scenario can change quite quickly & without much warning.

Even if posted before we might do well to reconsider what the previous estimates were, this is from last October, prior to the recent tragedy of the smelter explosion & these new notes of cancelled projects:

https://www.channelnewsasia.com/business/sumitomo-metal-sees-global-nickel-supply-surplus-widening-2024-3823221

In there we see the following notes of interest-
1. Indo NPI production in 2023 was up 16.1%, forecast to rise by 10.3% this year ( already slowing, as many of us have already noted ).

2. 2023 Total demand was up by 8.5%
Total supply was up by 8.9%

3. Projected surplus- 2023 = 24,000 tonnes.
2024 = 36,000 tonnes.

4. Battery demand- 2023 = 450,000 tonnes.
2024 = 550,000 tonnes.

Add to that the increased costs of safety protections being no demanded by workers as Indonesia heads towards elections, the fact that most of its production can’t get IRA subsidies & our project becomes an even better investment proposition.

Lastly the IEA projections of supply & demand under a net zero pathway ( which appears to be the almost single
minded goal of the U.S., EU etc ), which shows a need for 1,000,0000~ more tonnes of new supply by 2030. Well- 60,000- potentially 180,000 of those tonnes will now need to be ‘found again’.

That is two, potentially six, times what we aim to produce from 2027 if things go as many of us here believe they may. If and may because no jinxes allowed in my posts!