Japan: Sumitomo Mining projects global nickel supply shortfall in 2022

Sumitomo Metal Mining has forecast that the global nickel market in 2022 is likely to witness a supply shortage of 68,000 t. In 2021, there was a supply shortage of 135,000 t.

Indonesia's nickel pig iron (NPI) production is expected to increase significantly and demand for stainless steel is expected to remain strong as sourcing for battery manufacturing is supposed to grow.

Therefore, there is no immediate solution as far as addressing the shortage is concerned.

The global supply and demand of nickel in 2022 is forecast at 2,931,000 t (up 11.4% y-o-y) and consumption should be around 3 million tonnes (up 8.4% y-o-y).

NPI production is estimated at 380,000 t in China (down 9.7% year-on-year) and 1.06 mnt (up 20.6% y-o-y).

On the supply front, Indonesia's NPI production is expected to exceed 1 mnt for the first time as production of Norrisk nickel, which fell due to mine trouble in the previous year, has recovered, and the Ambatby project resumed operations in Mar'21.

The production volume of class 1 nickel is expected to increase by 100,000 t y-o-y due to the increase in production of nickel.

In terms of demand, the world's crude steel production is estimated at 57.31 mnt (up 3.5% y-o-y), of which China's production is estimated to be 30,999,000 t (up 12% y-o-y). In addition, battery applications are expected to expand to just over 410,000 tons (up 24.2% y-o-y).

The supply and demand of class 1 nickel may continue to remain tight because a shortage balance of less than 70,000 t is expected in 2022 against the current LME inventory which is about 73,000 t.

Production of class 2 nickel, including NPI, is expected to increase, but expert sources said that NPI will be made until it exceeds the demand for stainless steel. "I think that the shortfall will be supplemented by withdrawal from LME inventory and matting of NPI, but I think it will take some time before the movement of matting contributes to supply" showed that.

Regarding the impact of the recent rise in nickel prices on supply and demand, "There is no sense of slowdown in domestic demand, but it is difficult to predict the future due to short-term rises. However, if prices remain high, final demand will be reached. There is a possibility that it will have an impact. "

Regarding the impact of Russia's invasion of Ukraine on supply and demand, Mr. Niwa said, "It is difficult to predict the impact on supply and demand, but I don't think Russia's production will stop. I heard that the premium in Europe is rising. I would like to see what kind of impact it will have in the future".

This article has been published under an exchange agreement between SteelMint and Japan Metal Daily.