Global nickel supply will exceed demand by 76,000 mt in 2022, after the market was in a deficit of 134,000 mt in 2021, the International Nickel Study Group (INSG) said.

Global primary nickel output is projected to total 3.12 million mt in 2022, up about 10% from 2021, while demand is expected to be at 3.044 million mt in 2022, up some 18% from 2021, the INSG said.

Indonesia, the largest nickel producer globally, is also creating its own domestic nickel sector, assisted by new high-pressure acid leaching (HPAL) projects, the commodities analyst Daniel Briesemann for Commerzbank said in a note.

“There is, however, a degree of uncertainty in these [supply] figures, particularly regarding Chinese and Indonesian production,” INSG said. “The estimates do not reflect any adjustment factor for potential production disruptions.”

The world’s leading producers are Indonesia and the Philippines, but significant deposits are also mined in Australia, Canada, Brazil, China, and Russia.

Essential step in energy integration

Nickel will be a key player in the energy transition because emissions-free technology will grow the market for nickel-cobalt-aluminum batteries used in electric vehicles, so previously mothballed or abandoned mining projects have undergone a renaissance, Briesemann said.

“New production capacity further up the value chain is also being invested in. New NPI plants are being established in Indonesia, for example," the Commerzbank analyst explained.

Russian Nornickel, the globe's largest supplier of high-grade nickel and palladium, a key producer of platinum and copper, stated surging Indonesian nickel pig iron (NPI) output would be the biggest driver of availability progress this year.

“But if there are new lockdowns in Indonesia to combat the coronavirus, the anticipated production-growth rate is likely overestimated,” Briesemann said.

In addition, output cuts in China following recent power cuts have also contributed to a fall in nickel output, while Covid-19 restrictions continue to weigh on production in Indonesia and New Caledonia, Macquarie analysts added.

In a note, ANZ said that, in the fourth quarter of 2021, energy-intensive and the carbon intensity of NPI put so much pressure on China’s NPI output, causing China to import NPI and refined nickel.

Nornickel swings to surplus

Nornickel said it sees a 2022 global nickel market surplus of 59,000 mt, reversing a 149,000 mt deficit in 2021.

The 2021 deficit was driven by growth in global nickel demand to the tune of 17%, led by the stainless-steel sector, which represented just over 70% of all nickel demand, and batteries, while a fall in the company’s production in 2021 was also a significant contributor.