Sumitomo Metal Mining projects surplus in global nickel supply-demand balance

Sumitomo Metal Mining projects a surplus of 151,000 tonnes (t) in the global nickel supply-demand balance for 2024, following an oversupply of 120,000 t in FY'23. Despite anticipated growth in stainless steel and battery demand, the continued increase in nickel-containing pig iron (NPI) production in Indonesia is expected to contribute to the surplus, potentially affecting the balance between Class 1 and Class 2 nickel.

In FY'24, global nickel supply is forecasted to reach 3.501 million tonnes (mnt), a 7.3% increase from the previous year, while consumption is expected to rise by 6.6% to 3.35 mnt. NPI production in China is projected to decrease by 12.9% to 350,000 t, while Indonesia's output is expected to surge by 18.2% to 1,492,000 t. Additionally, Class 1 nickel supply is expected to grow to just over 300,000 t.

Demand-wise, global crude steel production is anticipated to rise by 5.6% to 61.7 mnt, with China contributing 38.363 mnt, a 4.6% increase. Battery applications are expected to grow by approximately 40,000 t to 460,000 t.

Executive Officer at Sumitomo Metal Mining, noted concerns about the viability of operations in Australia and other countries if nickel prices drop below $8 per pound due to increasing material costs. He highlighted the potential impact on the supply side if the price slump persists.

Looking at long-term trends, it was mentioned difficulties in predicting the pace of electric vehicle (EV) penetration in the battery market, making it challenging to forecast future demand growth. While previously expecting a surplus for around 27 to 28 years, uncertainties surrounding EV adoption and other factors make future supply-demand balances unpredictable.

In FY23, global nickel supply and consumption surpassed 3 mnt for the first time, reaching 3,264,000 t (up 12.7%) and 3.144 mnt (up 6.9%), respectively. NPI production in China decreased by 4.1% to 402,000 t, while Indonesia saw a 27.3% increase to 1,262,000 t. However, the forecast does not account for the surplus of NPI production, which is expected to exceed demand for stainless steel.