The current oversupply in the nickel market is expected to persist over the next few years due to ramping up of new projects and a slower growth in demand, Reuters reported with a reference to industry analysts.
A surge in new nickel supply in Indonesia, the world's biggest producer with a market share of about 63%, has led to benchmark prices halving over the past three years.
"The market is in oversupply, and in Indonesia, several projects in the pipeline will be completed soon, increasing production capacity," said Jim Lennon, analyst at Macquarie, adding that surplus may persist until 2027-2028.
According to him, half of existing producers may face significant issues if nickel prices fall below $15 000 per ton, as battery demand for nickel may significantly decrease.
Two years ago, analysts forecast the demand in this sector to be at 1.5 million tons, but Lennon said it may fall to 967 000 tons by 2030. Last year, battery sector nickel demand amounted to 518 000 tons.
Denis Sharypin, strategic marketing director at Russia's Nornickel, said prices pushed down by oversupply mean that about one-fourth of nickel producers globally are making losses on a cash-cost basis.
Theodor Lisovoy, Managing Editor, Rough&Polished
