According to a Macquarie analyst, global nickel prices may have hit a floor and are poised for a market recovery driven by strong demand from the steel sector and a shrinking surplus of ore supplies.
Macquarie analyst Jim Lennon told a conference organized by Shanghai Metals Market in Jakarta that the belief is “we’ve seen the bottom, we’ve seen the supply adjustments, we see the uncertainty in future supply, and that is giving us quite a lot of support where the prices are today.”
Lennon forecast LME cash nickel prices at $17,379 per metric ton this year, down from $21,491 per ton last year. However, he expects the price to rebound to $20,500 per ton in 2025 and gradually rise to $23,000 per ton in 2028.
The price recovery is expected to be driven by several factors:
Mining approvals in top producer Indonesia faced delays this year for various minerals including nickel, causing a drop in ore inventories at smelters and forcing some companies to import ore from the Philippines. The Indonesian government approved production quotas of around 240 million metric tons of nickel ore annually for the next three years, which fell short of the 260 million tons of demand estimated by the Indonesian Nickel Miner Association (APNI).
Amid low prices and rising costs, nickel producers such as BHP and Anglo-American are also slashing output, further tightening the market.
Primary nickel consumption globally is expected to grow 8.9% to 3.53 million metric tons this year, compared to the 6.3% growth in supply. Strong stainless steel production in China and Indonesia will underpin nickel demand.
Nickel consumption in the battery sector, which stalled last year due to high battery stockpiles, is expected to resume growth in 2024. Demand for nickel for batteries is forecast to jump to 2.7 million tons in 2035, representing 48% of global nickel demand, up from 687,000 tons in 2025.