THE global nickel market faces prolonged oversupply until at least 2027-2028, according to Reuters citing industry analysts at a metals conference in Jakarta this week.
Indonesia, controlling 63% of global production, continues driving the supply surge that has halved benchmark prices over three years. Several new Indonesian projects near completion will further increase capacity.
“The market is in oversupply, and in Indonesia, several projects in the pipeline will be completed soon, increasing production capacity,” Macquarie analyst Jim Lennon told the Shanghai Metals Market conference.
Nickel traded at $15,380 per metric ton on Thursday, having touched a five-year low of $13,865 in April. This compares with a record high above $48,000 per ton in early 2022.
Lennon identified $15,000 as crucial for industry viability, with half of existing producers at risk below this level following production cuts in 2022-2023.
Demand growth has weakened, particularly from batteries, said Reuters. Increased adoption of cheaper lithium iron phosphate batteries has reduced forecasts significantly. Lennon cut his 2030 battery sector nickel demand estimate to 967,000 tons, down from an industry consensus of 1.5 million tons two years ago.
Denis Sharypin from Russia’s Nornickel warned that one-quarter of global producers operate at cash-cost losses. Indonesian smelters face compressed margins, with Steven Chen from Eternal Tsingshan Group predicting potential shutdowns.
“Smelters are really struggling, which may lead to reductions in production, and widespread cutbacks or shutdown in some of the smaller smelting operations may be in a not-distant future,” Chen said.
