On the London Metal Exchange over recent months the nickel price has fallen noticeably, settling around USD 18,000 per metric tonne. That drop is an impressive 42% versus the start of the current year. The basis for the decline was a global oversupply on the world nickel market caused by a sudden production surge in Indonesia.
Nickel output in that country rose sharply by 48% in 2022 and another 31% from January to November 2023. Thus Indonesia’s share, reaching 1.3 million tonnes from Q1 to Q3 2023, now accounts for more than half of world nickel production. Supplies from the country previously mainly included matte and hydroxide, but according to studies Indonesia may soon launch its own production of pure nickel forms traded on the exchange.
In 2022 supply exceeded nickel demand by 104 thousand metric tonnes. According to the latest expert forecasts, the surplus in 2023 will be 223 thousand metric tonnes. Next year the gap is expected to widen to 239 thousand metric tonnes.
Although significant growth in nickel demand is forecast in coming years thanks to use in EV batteries, analysts assume supply will keep growing even faster. That will create additional price pressure and push prices down.
Indonesia can already be called a giant laboratory testing a unique chemical composition of nickel: many technical specialists are working on new ways to process relatively low-grade ore mined there into purer forms.
As the technological gap between nickel matte (the so-called intermediate product) and pure metal shrinks, the price gap on the market also shrinks.
Overall, the nickel price decline is linked to market overload caused by the unexpected production increase in Indonesia. This poses challenges for the industry but also opens new prospects for companies that can adapt to changing market dynamics and effectively use opportunities offered by nickel oversupply.
One vivid example of such an enterprise actively responding to the current situation is Petersburg Plant of Precision Alloys. A key PZPS focus is production of nickel-based precision alloys. The company continually increases melting volumes of such materials, thereby raising its competitiveness amid falling raw-material prices.
