By  Paul Ploumis 18 Aug 2015  Last updated at  04:08:39 GMT

CANTEBURY (Scrap Monster):  Macquarie has revised its nickel outlook for the year. According to the Australian bank, nickel market is likely to end in surplus of 15,000 mt in 2015. The bank, in its earlier forecast, had predicted that global nickel market would record a deficit of 30,000 mt during the year.

The research note states that nickel prices are unlikely to rally to $15,000-$17,000 per mt by end-2015, as was observed in its earlier report. The weaker demand outlook for the metal coupled with large metal stocks may drag the prices. The bank has also lowered the stainless steel demand growth forecast from 4% earlier to 2.4%. The drop in stainless steel demand may affect global nickel consumption levels. Incidentally, stainless steel production industry accounts for approximately two-thirds of the global nickel demand.

The nickel demand growth has dropped by 2% year-on-year during the first half of the current year. There has been a corresponding fall in nickel supply as well. The global nickel production declined almost 1.5% during H1 2015. The Indonesian ore export ban led to huge fall in Chinese nickel pig iron production. The global nickel pig iron production rose 6%, whereas the Chinese production tumbled by 22% during the initial six-month period of the year. Year-on-year, the Chinese nickel pig iron production is expected to drop by 85,000 mt. This will cut the global nickel supply by 2.3% to 1.95 million mt in 2015.

The Chinese nickel demand is likely to remain bearish during the second half of 2015. It doesn’t see the demand to stage rebound any time during this period. On the contrary, there is higher probability for Chinese demand to weaken in the immediate short term.