Nickel Prices Face Uphill Battle Amid Market Challenges
The nickel market is navigating a challenging year, marked by uncertainties and a rollercoaster ride in prices. Market imbalances, sluggish demand, economic uncertainties, geopolitical risks and bearish investor sentiment have converged to create a tumultuous landscape.
Nickel prices have notably underperformed in 2023, with a nearly 40% decline year-to-date through October, according to Marex Research. In early November, LME nickel plummeted below $18,000 per tonne from its early-year high above $30,000, leading to a surge in nickel stocks in LME warehouses.
The nickel market's fundamentals have pressured sentiment and pricing. The International Nickel Study Group (INSG) projected a surplus of 223,000 tonnes in 2023 and 239,000 tonnes in 2024, primarily due to increased nickel output, especially from Indonesia.
Indonesian nickel pig iron (NPI) production is set to expand, along with the growth of high-pressure acid leaching plants and the conversion of NPI into nickel matte. INSG estimates reveal a remarkable 31% year-on-year surge in Indonesian mined nickel output during the first seven months of 2023, following a 48% annual increase in 2022.
In the United States, stainless steel recyclers are benefiting from improved demand in international markets, partially offsetting domestic demand weakness. Recent data from the US Commerce Department shows a nearly 27% increase in US exports of stainless steel scrap to over 400,000 tonnes during January to September 2023.
India has emerged as the largest importer of recycled stainless steel from the United States, with shipments in 2023 rising by an impressive 33.7% to 141,634 tonnes through September.
As the nickel industry grapples with these complex dynamics, participants are closely monitoring developments, hoping for a more stable and prosperous future.