Higher nickel prices are being sustained as recyclers benefit from revitalised stainless steel production around the world and the related growth in demand for scrap.
Nickel cash prices at the London Metal Exchange rose more than 25% over the course of 2021 and continued to rise into early 2022 amid healthy global nickel demand growth and constrained supplies. In mid-January, LME nickel was trading above US$ 22 500 per tonne as nickel stocks in LME warehouses dipped below 95 000 tonnes, down sharply from the more than 260 000 tonnes registered in the first quarter of 2021.
Stainless steel recyclers have benefitted from rising nickel and other raw material input prices, along with expanded global stainless steel mill production and the accompanying improvement in stainless scrap demand.
Most analysts expect tight global nickel and stainless steel market balances to continue in 2022 as electric vehicle battery demand ramps up, primary nickel production continues to play catch up and stainless steel production in China is constrained by power cuts. Macquarie Research reports a number of Chinese stainless steel mills, including ZLJ Steel, have announced production cuts until March 2022.
On the demand side of the equation, the China Association of Automobile Manufacturers is projecting new EV sales in China will increase from 3.4 million units in 2021 to five million units this year. In addition, Macquarie reports that EV battery demand, and by extension nickel demand, will be boosted by the US infrastructure spending package which includes US$ 7.5 billion (EUR 6.6 billion) to build half a million EV charging stations.
Fastmarkets notes that ‘Despite some competition from other battery chemistries in the low-to-mid-range market, EV-related nickel demand is forecast to record strong growth in the coming years as the electrification of the automotive sector continues. At its recent investor update Nornickel forecast demand to increase to 400 000 – 600 000 tonnes annually by 2025, from 250 000 tonnes.’
Meanwhile, the INSG is forecasting world primary nickel usage will increase from 2.77 million tonnes in 2021 to more than three million tonnes in 2022.
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