Norilsk Nickel expects shortage of nickel in global market

Inside Norilsk Nickel. Photo: fin-consult

The Russian mining giant Norilsk Nickel expects a shortage of nickel in the global market will maintain at least in the short term amid strong demand from stainless steel and battery producers, according to a joint forecast given by Norilsk Nickel with ICBC Standard Bank.

Earlier the analysts expected a surplus of the metal, but the pandemic and the destruction of supply chains led to the revision of their forecasts.

According to them, as nickel supply declined, the market faced with a steady recovery in demand and massive restocking throughout the value chain. Strong nickel demand remains strong in key sectors - stainless steel and batteries - and ferronickel capacityies in Indonesia is lagging behind due to the pandemic.

As a result, the company expects that for the current year the demand for nickel will grow by 17% - up to 2.85 million tons, and the supply by only 7% - up to 2.7 million tons. A year earlier, the nickel market was in surplus of 82,000 tons, and in 2022 it will return to a surplus, which in the base case will amount to 59,000 tons - mainly due to low-grade nickel. In the high-grade nickel segment, the market will be balanced, but with the risk of shortages.

The nickel market has shown significant growth over the past year, said Oksana Lukicheva, an analyst at the global research department of Otkritie Broker (Otkritie Investments) in an interview with Russian Expert business paper. The cost of futures on the LME exchange increased from US$16,000-20,000 per ton, returning to the figures of 2012.

The growth was driven by the rapid recovery in global nickel consumption, mainly from the steel industry (+ 17%) and battery production (+ 43%). Consumption increased in 2021 by about 16.7%, to 2.8 million tons, and production - by only 9%, to 2.79 million tons.

By: Eugene Gerden