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BMI (a unit of Fitch Solutions) is maintaining its nickel price forecast for 2024 at $18,000/tonne, as excess supply continues to drag prices down from 2022 levels.
The brokerage anticipates increased production in Indonesia and Mainland China, will be the core driver of price losses.
However, key market drivers, including potential supply disruptions and a weaker U.S. dollar (DXY) once the Federal Reserve cuts rates from September, are expected to place a floor under prices throughout the year, preventing a significant decline from current levels.
Nickel Futures (LN1:COM), trading -0.68% lower at $17,205.00/tonne, have plunged 15% over the past one year.
Beyond 2024, BMI expects nickel prices to increase steadily to 2028, rising to $21,500 as the market surplus narrows on the back of surging demand for the battery metal.
Image source: BMI
In addition, the brokerage projects a surplus of 253kt in the global nickel market in 2024, up slightly from a surplus of 209kt estimated for 2023.
“This glut is primarily attributed to Indonesia’s increased production of nickel pig iron and intermediate nickel products, a direct consequence of heightened investment in its nickel sector following the imposition of a nickel ore export ban in 2020.”
For context, Indonesia’s refined nickel production rose 24.7% to 383kt in the first quarter, and the world’s second-largest producer of refined nickel, Mainland China, registered growth of 2.3% y-o-y to 220kt, the brokerage added.
Among challenges, the brokerage says, delays in Indonesia’s approval of mine production quotes has led to growing concerns over dwindling domestic ore stocks across smelters, while producers outside Indonesia are grappling with a difficult operating environment due to falling nickel prices. At the same time, the escalation of political tensions in key producer New Caledonia has the potential to tighten global supply, it added.
Chemicals company BASF (OTCQX:BASFY) and French miner Eramet (OTCPK:ERMAF) (OTCPK:ERMAY) last month said they have canceled a planned $2.6B joint nickel-cobalt refining project in Indonesia, citing significant changes in the global nickel market.
Related nickel stocks: VALE (VALE), BHP (BHP), Homeland Nickel (SHL:CA) (OTCPK:SRCGF), Anglo-American (OTCQX:AAUKF), Glencore (OTCPK:GLCNF).