Nickel prices stabilize amid rising supply, slowing demand • Recycling International
Although nickel price volatility has been relatively limited in recent times, nickel and stainless steel markets continue to be impacted by global economic risk factors, including high levels of inflation, rising interest rates, the appreciation of the US dollar, the unstable Chinese real estate market and general expectations for slowing economic growth.
In addition, the traditional summer lull in trading activities, unpredictable transportation networks that were exacerbated by extreme weather conditions and high electricity costs further complicated the situation for nickel and silver market participants. stainless steel.
On the London Metal Exchange, nickel spot prices fell during August, from around $24,000 per tonne at the start of the month to less than $21,000 per tonne recently, while Nickel stocks in LME warehouses fell below 55,000 tons. With primary nickel supply increasing and stainless steel demand expected to calm, the current outlook for the remainder of 2022 is extremely cautious.
Growing global market imbalances
According to the latest estimates from the International Nickel Study Group, the global refined nickel market recorded a supply surplus of 10,400 tonnes in the first half of 2022, compared to a supply shortfall of 97,600 tonnes in the first half of 2021. INSG estimates that global primary nickel production increased 13.9% year-on-year between January and June 2022, outpacing the 1.3% increase in nickel use over the same period.
Macquarie Research estimates an even larger increase in total global nickel production in the first half of 2022 (+18% to 1.504 million tonnes). A recurring theme in the history of global nickel supply has been the disparity between the production of Class 1 nickel (traded on the LME) and the production of NPI, ferronickel and intermediate nickel products which are frequently used to produce stainless steel.
Macquarie reports “This year has seen a significant increase in production of third-party nickel intermediates (matte/MHP/MSP) in Indonesia and elsewhere (production was estimated at 122 kt in HY22, up 258% YoY or 88kt). For the year, the total growth could be ± 200 kt.
Indonesia continues to be the primary force in reshaping the global nickel and stainless steel supply landscape. As Reuters reported, “Indonesia was the world’s largest nickel exporter before banning ore exports two years ago in favor of attracting foreign investors to develop nickel smelters and industries in downstream onshore, China being an important source of investment“.
According to Macquarie, 40 new Indonesian kilns were commissioned in the first half of 2022 alone, adding 350 to 400,000 tonnes of annual production capacity, with another 37 kilns expected to start up in the second half.
The demand for stainless steel in question
Restrictions on the export of raw materials from Indonesia and the rise of Asian exports of stainless steel products have complicated matters for western stainless steel producers and scrap processors. Finland-based Outokumpu recently screened his 3rd Stainless steel shipments in the quarter could decline 10-20% quarter-over-quarter, in part due to increased stainless steel imports from Asia.
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