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Nickel Prices Shoot Up Due to Supply Lagging Behind Robust Demand

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Nickel Prices Shoot Up Due to Supply Lagging Behind Robust Demand

IndexBox has just published a new report: ‘World – Nickel – Market Analysis, Forecast, Size, Trends and Insights’. Here is a summary of the report’s key findings.

Nickel prices skyrocketed on the expectations of a shortage on the global market provoked by the increase in demand that outpaces the supply growth. The rebound in the steel industry and rising electric vehicle manufacturing drive nickel consumption. Pandemic-related lockdowns in the first half of 2020 and the related uncertainty led to a decrease in the global nickel mine output by -4% y-o-y. Despite this, refined nickel production increased by +2% y-o-y, boosted by the recovering demand from mid-2020 and the use of secondary smelting. Indonesia, the largest nickel ore producer worldwide, banned exports of the ore and thus achieved a record output of refined nickel. 

Key Trends and Insights

According to World Bank, the average nickel price in the first half of 2021 reached $17,489 per tonne, which was 27% higher than the 2020’s average price of $13,787 per tonne. Rising demand from the recovering steel industry and from emerging electric car manufacturing provokes the price rally, while the supply is expected to be insufficient in the immediate term due to a decrease in the mined output.

In the first half of 2020, global demand for nickel decreased, following the pronounced slump in steel output. From Q3 2020, it started to recover, driven by the Chinese and Indonesian stainless steel and nickel pig iron sectors. Thanks to this, global refined nickel production grew by 2% in 2020, with the use of recycled nickel enabled to offset the shortage of mined ores.

Global nickel mine output in 2020 fell from 2.6M to 2.5M tonnes of nickel content, following the pronounced slump in steel output in the first half of the year. The U.S. (+18.5%), Australia (+6.9%), Brazil (+21.6%) and Russia (+0.3%) observed an increase in nickel ore mining in 2020, while in Canada (-17%), the Dominican Republic (-17.4%), and Indonesia (-10.9%), output slumped significantly.

Indonesia, the leading global producer of nickel ore, reduced its volume of mine production from 853К to 760К tonnes, banned the export of unprocessed nickel ore and increased the refined nickel production to 636K tonnes. This should help Indonesia to emerge as the largest refined nickel producer worldwide, displacing China from the current leader’s position.

Demand from growing stainless steel production will be the main driver of the nickel market in the medium term. Another impact comes from the rapid expansion of the electric vehicle industry. New types of energy-efficient electric vehicle batteries that are being developed use a higher nickel content in the cathode, which will accelerate the consumption growth in this industry.

Global Refined Nickel Production

In 2020, production of refined nickel decreased by -0.5% to 2.6M tonnes for the first time since 2015, thus ending a four-year rising trend. The total output volume increased at an average annual rate of +4.5% from 2012 to 2020. In value terms, nickel production stood at $38.5B in 2020 estimated in export prices.

The countries with the highest volumes of refined nickel production in 2020 were China (725K tonnes), Indonesia (636K tonnes) and Russia (236K tonnes), together comprising 61% of global production.

From 2012 to 2020, the most notable rate of growth in terms of refined nickel production, amongst the leading producing countries, was attained by Indonesia (+55.7% per year), while nickel production for the other global leaders experienced more modest paces of growth.

Global Refined Nickel Imports

In 2020, global nickel imports dropped to 691K tonnes, shrinking by -9.7% on 2019 figures. In value terms, nickel imports shrank to $9.4B (IndexBox estimates) in 2020.

China represented the largest importer of nickel in the world, with the volume of imports accounting for 214K tonnes, which was approx. 31% of total imports in 2020. The U.S. (90K tonnes) held the second position in the ranking, followed by Germany (57K tonnes), the Netherlands (37K tonnes) and Japan (32K tonnes). All these countries together took near 31% share of total imports. The following importers – India (31K tonnes), Italy (30K tonnes), South Korea (27K tonnes), Taiwan (Chinese) (24K tonnes), Sweden (20K tonnes), Belgium (16K tonnes), Austria (15K tonnes) and Spain (14K tonnes) – together made up 26% of total imports.

In value terms, China ($2.7B) constitutes the largest market for imported nickel worldwide, comprising 29% of global imports. The second position in the ranking was occupied by the U.S. ($1.2B), with a 13% share of global imports. It was followed by Germany, with an 8.1% share.

In 2020, the average nickel import price amounted to $13,651 per tonne, shrinking by -3.5% against the previous year. Average prices varied noticeably amongst the major importing countries. In 2020, major importing countries recorded the following prices: in Austria ($14,894 per tonne) and Japan ($14,825 per tonne), while China ($12,827 per tonne) and Sweden ($13,194 per tonne) were amongst the lowest.

Source: IndexBox Platform