In its latest market report, BMI, a division of Fitch Solutions, said it is maintaining its 2024 nickel price forecast at $18,000 per tonne as oversupply continues to drag nickel prices back from 2022 levels.
And just last month, Macquarie analysts noted that global nickel prices may have bottomed out, with the nickel market expected to recover on the back of strong demand from the steel industry and a shrinking ore supply glut following Indonesia’s slowdown in granting production licences. Analysts forecast that nickel prices could rebound to $20,500 per tonne in 2025 and gradually climb to $23,000 by 2028.
Nickel prices were hit hard in 2023, with the LME nickel price recording a nearly 40 per cent decline for the year, its worst performance since 2008 and the worst among industrial metals, in contrast to the 3 per cent rise in copper prices and the roughly 20 per cent rise in iron ore in Singapore.
Fitch notes that although a brief rally in early 2024 pushed prices to a yearly high of $21,615/t in mid-May, nickel prices retreated to $17,291/t on 28 June as investor sentiment deteriorated.
On the supply side, Fitch expects increased nickel production in Indonesia and mainland China to lead to a significant increase in supply in 2024 (as in 2023), which will be a central driver of the price decline. Fitch expects the global nickel market to experience a surplus of 253,000 tonnes in 2024, slightly higher than the 209,000 tonnes expected in 2023. The main reason behind the surplus is the increase in production of nickel pig iron and intermediate nickel products in Indonesia, which is a direct result of its increased investment in the nickel sector following the implementation of a nickel ore export ban in 2020.
A wide range of minerals, including nickel, have faced delays in mining approvals in Indonesia this year, leading to a drop in smelters’ ore stocks and forcing some companies to import ore from the Philippines. Currently, the Indonesian government has approved production quotas (RKABs) of around 240 million tonnes of nickel ore per year for the next three years, which is lower than the demand for 260 million tonnes of nickel ore estimated by the Association of Indonesian Nickel Miners (APNI) this year.
Nickel consumption in the battery sector stagnated last year due to high battery inventories, but will return to growth in 2024, the analysts added.
Looking ahead, BMI expects the nickel price to rise steadily until 2028, rising to $21,500 as the supply surplus narrows against the backdrop of surging demand for the battery metal. With the market surplus shrinking significantly, the nickel price will reach $26,000 per tonne in 2033, putting upward pressure on prices.
