Nornickel expects palladium deficit, platinum and nickel surplus in 2021 – report
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(Kitco News) – Nornickel, the world’s largest producer of high-quality palladium and nickel and a major producer of platinum and copper, today presented the seventh market review for nickel and platinum group metals ( PGM) prepared in alliance with ICBC Standard Bank on the basis of fundamental analysis of global economic and industrial data.
According to the report, in 2020, the PGM industry felt the pinch of the COVID-19 pandemic, the entire value chain, from miners and scrap collectors to automakers and other industrial users suffering the consequences of crisis.
However, despite the constraints that emerged, market players have shown great flexibility and taken the necessary measures in good time, which has enabled them to mitigate the influence of the pandemic.
Experts pointed out that the rebound in the automotive industry in the second half of 2020, especially in China, and the processing capacity failures in South Africa have kept the palladium market in a deficit of 0.3Moz in 2020.
This year, experts are seeing an impressive recovery in demand for automobiles and other industrial applications almost to pre-COVID levels, although partially mitigated by the chip shortage. The suspension of the Nornickel concentrator and the Oktyabrsky and Taimyrsky mines widened the expected shortfall of current supply over demand to 0.9Moz in 2021 from the previous estimate of a balanced market, experts added. .
The platinum market (excluding investment) was in surplus of 0.2 Moz in 2020. The decline in industrial and jewelry consumption was offset by the reduction in the supply of refined metals caused by blackouts at processing plants in Africa. South, as well as the decline in scrap metal collection and the challenges of recycling SiC-based catalysts.
This year, experts note the recovery of mining production and recycling as well as the release of materials under construction in South Africa, as the rebound in demand, while quite impressive, is still not enough. strong to consume all metal units hitting the market in 2021. Experts expect the platinum market to be in a 1Moz surplus (excluding investment) this year about the same from the previous estimate.
Since the December report, experts have revised the nickel market surplus for 2020 and 2021. They currently estimate the surplus at 76 kt of nickel in 2020 (108 kt previously) and at 52 kt in 2021 (75 kt previously). .
Experts estimate that the post-COVID recovery in primary nickel demand of 15% year-over-year in 2021 will be offset by the massive expansion of Indonesia’s nickel smelting (NPI) capacity.
In 2022, they expect the surplus to exceed 100 kt thanks to continued expansion of low grade nickel. Accelerated growth in the battery sector with its increasingly stringent ESG compliance requirements and respective supply reductions could mitigate the surplus.
The future market equilibrium will be determined by the pace of electrification, the experts said. Currently, the electric vehicle market is growing at a double-digit rate thanks to the support of legislation, government incentives, battery chemistry as well as cost optimization. Experts argue that the long-term growth in demand for nickel will come mainly from the battery sector and at a steady pace.
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