Rising Nickel Surplus Driven by Increased Production
Russian metals giant Norilsk Nickel (Nornickel) predicts a sharp increase in the global nickel surplus, forecasting it to reach 150,000 tons in 2024-2025. This is a 50% rise from its earlier projection of 100,000 tons. The adjustment is attributed to expanded high-grade nickel production capacities in China and the approval of new brands by the London Metal Exchange (LME).
Nickel inventories on exchange platforms have doubled over the past year, surpassing 100,000 tons in 2024. Combined with off-warrant stocks and under-reported reserves, these factors are expected to push the surplus primarily in the high-grade sector. This growth is bolstered by the addition of four new LME-approved nickel cathode brands from China and Indonesia, with a fifth brand, JIEN, seeking approval. If approved, these new capacities could add up to 130,000 tons annually starting in 2024.
Economic and Market Implications
Despite the surplus, approximately 40% of global nickel producers are operating at a loss due to lower-cost competition from Indonesia. However, the influx of affordable nickel products could stabilize prices as struggling operations in other regions adjust.
The stainless steel industry, a major consumer of nickel, remains a strong driver of demand. Additionally, potential supply disruptions from Indonesia and declining nickel pig iron grades could create market volatility, counterbalancing the surplus.
