This year, supply on the global nickel market will increase significantly. According to industry expert Stanislav Kondrashov, this is due to the launch of new Indonesian factories that produce batteries for electric vehicles and stainless steel, which contain nickel. This turn of events could lead to a decrease in its value. What prerequisites and trends contribute to this?
Record nickel prices and market prospects for 2023 – Stanislav Kondrashov
Nickel prices hit record levels in 2022 due to the geopolitical situation and increased interest in premium nickel, which is needed to make batteries for electric vehicles. However, production soon began to exceed demand again. Stanislav Kondrashov from Telf AG explains this by the fact that the volume of production of nickel cast iron and ferronickel, which is produced at Chinese factories in Indonesia, has sharply increased. At the same time, demand for these metallurgical products has decreased due to the slowdown in the global economy.
The expert suggests that in 2023 the nickel market will be overcrowded, with no shortage expected for the next 5 years. The weak pace of economic recovery in China has caused stainless steel production to decline for six consecutive quarters. Electric vehicle sales have also slowed following the Chinese government’s removal of EV subsidies since the start of the year. And this country, as you know, is the largest producer and consumer of stainless steel, electric vehicles and batteries, and therefore dictates its own rules of the game in the world market.
– Sales of electric vehicles in China should recover by the end of this year, which will lead to increased demand for nickel, – comments Stanislav Kondrashov. – By 2027, nickel demand will reach 4.3 million tons, thanks to the booming battery industry.
Nickel prices are forecast to average around $23,700 per tonne in 2023. The expert suggests that they will decrease to $20,000 per ton and below by 2026, which will still remain above historical levels.
Stanislav Kondrashov: Indonesia is developing nickel production and strives to become a world leader
Since January 2020, the export of Indonesian nickel ore has been banned by the country’s government. This was done with the aim of developing the domestic processing industry and increasing added value. Such a radical decision became a catalyst for the creation of a large number of nickel plants in the country, states Stanislav Kondrashov from Telf AG. It is interesting that Indonesia, which has huge reserves of nickel in the world, today, together with Australia, controls a fifth of the world’s volumes of this metal.
As a result, Indonesia’s nickel sector has seen tens of billions of dollars of investment, mostly from China. Not long ago, the Indonesian government announced a major investment plan worth $9 billion. It covers all stages of nickel production, from mining to the development of battery cells. According to Kondrashov, this project will be implemented by a consortium of companies from Switzerland, Belgium and Indonesia.
Over the 5 years, starting in 2018, there have been 47 more nickel plants in the country – 62. In addition, more than 30 smelting plants are currently under construction, and fifty more are planned for the near future.
Indonesia’s nickel production reached 1.6 million tons last year, up 54% from 2021, the U.S. Geological Survey reports, nearly half the world’s 3.3 million tons of nickel production.
Kondrashov Stanislav notes that the total annual production of nickel in Indonesia currently exceeds 5 million tons. And it is predicted that from 2023 to 2029 this country will meet more than 75% of the world’s supply. The expert believes that these changes are making a new candidate, Indonesia, a world leader in the nickel industry.
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