Nickel prices are likely to experience further downward trend this year as supply, particularly from Indonesia, surpasses demand, Kallanish learns.

In a recent research report, Citi foresees a further 10-15% decline in nickel prices into the end of this year due to excess market supply, as well as cost deflations. It predicts that growth expectation is expected to reach the bottom in the first quarter of 2024, and base metal prices are likely to rise in the second quarter of 2024.

In May, Citi analysts lowered their 2023 nickel price forecast to $23,258/tonne from $23,443/ t. 

Shanghai-based futures company East Asia Futures believes the refined nickel capacity to be put into production is “relatively huge” in volume, and the consumption of refined nickel is set to decline. That’s because the use of briquette in nickel sulphate production is being replaced by intermediate products such as nickel matte and mixed hydroxide precipitate (MHP) produced in Indonesia. As a result of increasing supply and decreasing demand, the expectation of excess nickel supply is relatively strong, the company suggests.

With the increased use of MHP in nickel sulphate production, Rystad Energy estimates nickel intermediates now account for 60% of the feedstock for nickel sulphate production in China. The Norwegian consultancy notes that battery-grade nickel sulphate prices in the Asian country continued to drop over June, but at a slower pace due to recovering downstream demand.

It estimates the free-market nickel metal price dropped 5.1% month-on-month and 17.9% year-on-year in June to $21,193/t. The average price for battery-grade nickel sulphate (ex-works China) was forecast to be CNY 33,500 ($4,673)/t – reflecting declines of 1.5% m-o-m and 20.8% y-o-y. Meanwhile, Rystad estimates MHP prices, cif China, to have increased 0.5% last month to $15,250/t.

“In the medium term, we estimate the nickel sulphate price is likely to regain some strength as nickel-rich NCM battery demand overseas remained healthy,” the company says in a report. Benchmark free-market nickel metal prices are expected to continue to stay in the low $20,000/t range, it adds.