Nickel

Global Market Outlook on Nickel

• Nickel mine supply remains subject to a range of disruptions, including reduced production in Brazil and the Philippines, as well as the Indonesian export ban. Despite this, the world’s refined nickel market was expected to record a net surplus for 2020, as the pandemic was expected to have a greater negative impact on consumption than on production. The market was expected to move from a 61,000-ton deficit in 2019 to a 43,000-ton surplus in 2020.

• Global primary finished nickel consumption was forecast to contract by 15% in 2020, as the COVID-19 pandemic has been adversely impacting the world, with the Chinese construction and automotive sectors facing a huge dent in their revenue pools. The resulting shutdowns due to the pandemic have severely reduced activity in the industrial and construction sectors, resulting in weaker demand for base metals, including nickel.

• April’s upward trend in nickel prices was likely a false indicator of early recovery, as previous fears of a supply shortage were alleviated by an expected widening market surplus for nickel. However, given its exposure to China’s stainless steel and electric vehicle (EV) production, there is a wide consensus that nickel is one of the best-placed base metals to rebound, as the world, particularly China, starts to recover economically from the COVID-19 pandemic

• China’s nickel ore imports plunged by 66% year-on-year (y-o-y) in April 2020, as imports from Indonesia and the Philippines fell. China’s nickel ore imports declined by 35% y-o-y in the first four months of 2020. Falling nickel ore port stocks in China signal a tightening nickel ore market, as China accounts for just over half of the world’s nickel demand. Global nickel demand is expected to be impacted more negatively by the COVID-19 than nickel supply.

• The Indonesian nickel ore ban and a sharp fall in exports from the Philippines are having significant effects on Chinese nickel pig iron output, which declined for the second consecutive quarter in March 2020. In early April 2020, the Philippines’ biggest nickel miners suspended operations, as a result of measures to contain COVID-19. These suspensions resulted in nickel ore output in the March quarter declining by 27% from a year earlier to 28,000 tons. With more than half of its 29 operating nickel mines reporting zero production, port data suggests exports from the Philippines fell drastically in April 2020, with January to April 2020 exports of nickel ore falling by 40% y-o-y. The Philippines has become the main feedstock source for China’s nickel pig iron industry, since the introduction of Indonesia’s export ban.

• Vale, the world’s largest producer of nickel, lowered its nickel production guidance for 2020, with the company citing heavy rain, unplanned outages, regulatory delays, and ongoing logistics disruptions caused by COVID-19-induced lockdowns. Vale revised its 2020 production guidance for nickel down from 200,000–210,000 tons to 180,000–195,000 tons for the year. Vale nickel production totaled 208,000 tons in 2019.

Global Nickel Market Trends

The demand for nickel is coming from the gas & oil industry given the requirement of corrosion-proof products. Oil rigs are susceptible to structural and other deformities due to corrosion which has a significant effect on their business operations. In such extreme pressures and temperatures, nickel alloys offer exemplary performance.

Electric resistance heating elements need different kinds of nickel alloys given their umpteen heat resilience. Soft magnetic aspects of nickel-iron (Ni-Fe) alloys make them beneficial in electronic devices and communication equipment that require electromagnetic shielding. The rising demand for anode plates, transistor enclosures, plater bars, and other electronic items will propel the demand for nickel and its alloys in the electrical & electronics industry.

Resistance heating alloys have broad use cases, including heating systems, industrial furnaces, and household appliances. In furnaces, such alloys work at 1700 °C in firing ceramics, while at 1300 °C in metal processing domains. Industrial furnaces are poised to see surging demand for nickel alloys owing to the rising production in different metal processing verticals, such as forging and casting, among others.

Global Nickel Market: Drivers and Constraints

Drivers

Demand from Battery Manufacturing

• The use of nickel in battery manufacturing is expected to expand over the outlook period, as both the scale of battery manufacturing expands and the nickel intensity of battery technologies rises. Technological advances are facilitating the manufacture of batteries with a higher amount of nickel, which is favored for its efficiency, longevity, and cost-effectiveness

Consumption of Stainless Steel

• Chinese net exports of stainless steel for March almost doubled over January and February 2020. Defying market expectations, Chinese domestic inventories have fallen, the stainless steel price has strengthened, and a recovery in April production has led to improved conditions for Chinese stainless steel markets, consequently improving expectations for nickel consumption

Constraints

Demand from End-use Industry

• End-use demand for nickel will be adversely affected by COVID-19 that the LME nickel price will recover at the slowest pace among the base metals. It is forecasted a 15 percent drop in end-user demand for nickel year-on-year in 2020, increasing the likelihood of a significant reduction in investment interest

Supply Disruption

• Nickel supply disruption log for 2020 currently estimates unplanned losses this year at 203,000 tons (7.5 percent) of annual production. Most of these are due to restrictions related to COVID- 19. Going forward, it seems that demand rebound hopes, supply disruption threats, a potentially bullish technical chart setup, and risk-on sentiment seem to be outweighing the potential negatives for nickel prices

Why You Should Buy This Report

This report on nickel industry outlook covers:

• Market intelligence to enable efficient decision-making

• Growth prospects and trends assessment

• Competitive strategy and nickel demand forecast analysis

• Regional and segmental nickel forecast for market evaluation

• COVID-19 impact and how to survive these fast-changing markets