Nickel price to average $21,000 in Q3 as supply soars – ING

Nickel price has underperformed the market this year, making it the worst-performing metal in the London Metal Exchange (LME). The metal dropped to a low of $19,937 this year, about 27% below the highest point in March. 

Supply and demand concerns

Nickel is one of the most important metals today as the world transitions from internal combustion engines (ICE) to electric vehicles. It is widely used in the manufacture of batteries, which are the most important part of EVs.

Demand for EVs is rising around the world. A recent report showed that the total number of EV sales will jump to over 14 million this year, with Tesla Model Y being the best-selling passenger car this year.

Higher demand for EVs should be good for key metals used in their manufacturing, including lithium, copper, and nickel. However, recently, these metals have underperformed, mostly because of the rising supply.

For nickel, most of this supply is growing in Indonesia, the biggest producer in the world. Indonesia’s production expanded by 48% in 2022 to over 1.2 million tonnes. Nickel smelting is also rising in the country after the government banned the export of raw ore. As a result, smelters have jumped to about 62 from 15 in 2018.

Other countries like Canada, Zimbabwe, Russia, and the Philippines are also boosting production. This trend is expected to move to a surplus this year since demand seem to be moderating. 

Analysts expect that nickel usage will jump to 3.13 million tons this year while production is expected to be 3.37 million. China’s nickel imports have dropped to a multi-year low as the economic recovery stalls. In a recent note, analysts at ING said:

“We forecast nickel prices to remain under pressure in the short term as a surplus in the global market builds and a slowing global economy mutes stainless steel demand. We see prices averaging $21,000/t in the third quarter.”

Nickel price prediction

Nickel and other EV metals have been under pressure this year as investors focus on the looming supply surplus. The metal’s attempt to recover found a strong resistance at $23,347, the highest point on June 16th.

Nickel price is oscillating at the 25-period moving average and is at the key support level since it was lowest point on May 24th. Therefore, the outlook is bearish, with the next level to watch being at $19,937, its lowest point in June.

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