INSG forecasts nickel supply surplus and stainless steel uptrend in 2023

The stainless steel scrap market remained relatively stable, with the 304 grade scrap prices increasing by INR 458/t m-o-m in September 2023 due to fluctuations in futures and limited demand. Similar trends were observed in other raw material prices such as ferro chrome.

In the current market, LME nickel three-month futures are being traded at $18,855/t at the time of this report.

Preliminary figures from the World Stainless Association for the first half of 2023 reveal a 0.9% y-o-y decrease in stainless steel melt shop production, totaling 26.7 million tonnes (mnt).

Looking ahead, the International Nickel Study Group (INSG) anticipates a recovery in the stainless steel sector during the second half of 2023, with further growth expected in 2024. This growth will be driven, in part, by the increasing use of nickel in batteries for electric vehicles (EVs).

The global economy experienced some positive impacts from the reopening of China and lower energy prices at the start of 2023. However, the implementation of tighter monetary policies and higher interest rates to combat inflation is currently affecting business and consumer confidence.

Nickel pig iron

In Indonesia, nickel pig iron (NPI) production is expected to continue rising, while new high-pressure acid leaching (HPAL) plants geared towards producing mixed hydroxide precipitate (MHP) are increasing their output. Additionally, the conversion of NPI to nickel matte is on the rise.

In China, NPI production is projected to decrease in 2024, but nickel cathode and nickel sulphate production are expected to increase.

Nickel market

Regarding the global nickel market, primary nickel production is estimated to reach 3.417 mnt in 2023 and 3.713 mnt in 2024, with no adjustment for potential production disruptions.

In contrast, primary nickel usage is forecasted to increase from 2.957 mnt in 2022 to 3.195 mnt in 2023 and 3.474 mnt in 2024.

In light of these figures, the implied market balances indicate surpluses of 104,000 t in 2022, 223,000 t in 2023, and 239,000 t in 2024.