The production of electrolytic nickel, a form of nickel metal made from sulfate by Chinese producers in Indonesia, has been steadily increasing since last year, reaching a peak of 30,000 tonnes per month in the first quarter of 2024. Market sources predict that this volume could further rise by an additional 1,000 tonnes per month in May.
Interestingly, it is the new energy vehicle (NEV) firms that are currently leading the production of metals. This increase in nickel metal output coincides with a slowdown in EV sales growth in China following the discontinuation of a subsidy program that had previously fueled rapid industry growth.
The rise in nickel metal production is also reflected in the market prices, with the London Metal Exchange Official price of nickel reaching a historic high of $21,625 per tonne on May 20. Nickel sulfate prices have also been on the rise, primarily driven by higher input costs due to elevated nickel prices, rather than increased demand from the EV sector.
Facing challenges in the EV market, battery makers have shifted towards converting chemicals like nickel sulfate into more valuable metals. This trend has been further reinforced by the growing arbitrage between the two types of products.
While some producers are planning to expand their electrolytic nickel output, others are holding back intermediary products to focus on metal refining. The growth in nickel metal output is expected to continue in May, although some believe it may not be sustainable in the long run due to producers already operating at full capacity.
