In its market observations published on Tuesday April 25, the INSG said it expects both production and demand to increase for nickel globally, with world primary nickel production set to reach 3,374,000 tonnes in 2023.
This would represent a year-on-year increase of 10% from 2022 production levels.
The INSG forecasts that demand will increase to 3,314,000 tonnes in 2023, up 6% year on year.
“The INSG continues to expect mild growth in the stainless steel sector and the increasing use of nickel in batteries for electric vehicles (EV), despite the negative impact of the removal of subsidies in China,” the group said.
Nickel markets globally have come under pressure following weaker demand from consumers, with refined nickel premiums declining from the record highs seen in 2022, while nickel sulfate prices in China have recorded eight straight weeks of declines and nickel pig iron (NPI) prices remain under pressure from a weaker stainless-steel industry in China.
The benchmark London Metal Exchange nickel price is similarly trending lower, with the official cash price closing at $23,862.50 per tonne on Tuesday, down from $31,175 per tonne on January 3.
The INSG said the surplus forecast for 2023 is up from a surplus of 105,000 tonnes in 2022, primarily due to an increase in Class 2 nickel production globally, marking a significant trend shift for the market.
“Historically, market surpluses have been linked to LME deliverable/Class 1 nickel, but in 2023 the surplus will be mainly due to Class 2 and nickel chemicals (principally nickel sulfate)” the group said.
Class 2 nickel refers to non-LME deliverable materials such as NPI, mixed hydroxide precipitate (MHP) and nickel sulfate – primarily mined in Indonesia.
MHP has become a key industry feedstock source to help meet the growing demand for nickel from the EV battery sector.
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