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SunSirs: Macquarie Bank: The Nickel Market will Remain Oversupplied until at Least 2027
June 02 2023 10:12:59()

On June 1st, foreign media reported that Macquarie analysts said that with the rapid increase in Indonesian production, the global nickel market will face oversupply every year until at least 2027.

Indonesia has abundant nickel ore resources, coupled with the government's policy of encouraging domestic processing, which has led to rapid growth in nickel metal production in recent years. This metal is used to manufacture stainless steel and electric vehicle (EV) batteries.

Macquarie analyst Jim? According to data provided by Lennon, there may be a surplus of 142000 tons in the nickel market this year, up from 111000 tons in 2022, when global supply growth hit a record, with most of it coming from Indonesia.

Lennon stated at the Indonesian Nickel Cobalt Conference held in Jakarta that the oversupply will expand to 187000 tons by 2026 and then decrease to 40000 tons by 2027, with most of the increase being in low-grade "grade 2" nickel.

Ricardo, Research Director of the International Nickel Research Organization (INGS)? Ferreira stated at the same meeting that the organization also found a significant surplus of primary nickel this year, estimated at 293300 tons, which is higher than the surplus of 105200 tons in 2022.

Lenon stated that Indonesia produced approximately 1.45 million tons of nickel last year, but if all projects are combined, the total production capacity of existing, planned, and ongoing projects exceeds 5 million tons. Overall, the total amount of nickel mining last year was 3 million tons.

By 2029, Indonesian nickel production may reach over 75% of the world's supply, which may pose a challenge for European and US governments seeking localized nickel users.

INSG's Ferreira stated that nickel is still mainly used in the stainless steel industry, but the demand for metal in the battery industry is steadily increasing, with the proportion of total nickel consumption increasing from 8% in 2020 to 15% last year.

Macquarie's Lennon stated that by 2030, nickel demand in the battery industry may increase nearly fourfold to 1.69 million tons, compared to 484000 tons in 2022. However, he stated that the price of nickel sulfate, a chemical used in the manufacturing of electric vehicle batteries, is significantly discounted from the global benchmark nickel price of CMNI3 on the London Metal Exchange, indicating oversupply.

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