The nickel market is facing a major downturn as a result of oversupply and weak demand, according to a report by the Financial Times. With a 10% reduction in global nickel production over the past year amounting to 400,000 tons, the price of the metal has still experienced a nearly 45% decline.
One of the main reasons for this decline is the low grade nickel supply from Indonesia, which has flooded the market with nickel pig iron. Chinese investment in Indonesia’s mining sector is expected to further increase production to 2.2 million tons this year, accounting for 65% of global supply. However, the profitability of Indonesian mines at these prices remains questionable.
Major mining companies like BHP and Glencore have already taken action in response to the challenging market conditions. BHP has suspended its Australian nickel production until 2027, citing economic challenges, while Glencore announced the closure of its Koniambo mine. First Quantum Minerals has also halted mining at its nickel and cobalt operation in Western Australia and reduced its workforce.
The only solution to the nickel market’s slump appears to be an improvement in demand, particularly from the electric vehicle sector. Despite solid performance in stainless steel demand, growth in electric vehicle demand has slowed significantly in recent months. With sales of internal combustion engine cars remaining stable, the future of the nickel market remains uncertain.
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