Global Nickel Surplus Expected to Reach 150,000 Tons by 2024-25, Says Nornickel

Nornickel

Russian metals giant Norilsk Nickel (Nornickel) forecasts a significant rise in the global nickel surplus, projecting an increase to 150,000 tons for the years 2024-2025. This revised estimate is a 50% increase from the previously anticipated 100,000 tons. This adjustment is primarily attributed to a notable expansion in high-grade nickel production capacities in China.

Surge in Production and Market Implications

Nornickel notes that nickel inventories on exchange platforms have surged, more than doubling over the year to exceed 100,000 tons in 2024. The combination of these inventories with off-warrant stocks and under-reported reserves is expected to push the class 1 nickel surplus to the 150,000-ton mark. This increase is concentrated in the high-grade sector, spurred by new cathode capacities.

The London Metal Exchange (LME) has approved four new nickel cathode brands from China and Indonesia this year. A fifth brand, JIEN, has also applied for listing. If approved, the production capacity could see an additional 130,000 tons per year starting in 2024.

Economic Impact on Global Producers

Despite the rising surplus, about 40% of global nickel producers are currently facing losses. However, the influx of lower-cost nickel products from Indonesia is reshaping the market dynamics, potentially leading to a price increase as operations in other regions struggle to compete. The market could achieve a more balanced state due to robust demand from the stainless steel industry and possible supply disruptions from Indonesia, amidst uncertainties in regulatory approvals and declining nickel pig iron grades.