Norilsk increases nickel deficit forecast for 2016

By  Paul Ploumis 03 Sep 2015  Last updated at  03:07:45 GMT

SPOKANE (Scrap Monster): Norilsk Nickel PJSC-the world’s second largest producer of nickel has raised the nickel deficit forecast for 2016 by additional 5,000 tons, on account of production cuts by high cost producers and falling nickel prices. The Russian company also predicts drastic fall in Chinese nickel pig iron output. The nickel production outside China is also likely to see considerable decline.

According to latest metals forecast report published by Norilsk, the nickel market is likely to remain balanced in 2015. However, the global nickel deficit will rise to 60,000 metric tons in 2016. In its earlier forecast during March this year, Norilsk had predicted deficits of 20,000 metric tons and 55,000 metric tons for 2015 and 2016 respectively.

The slowdown in Chinese economic growth has sent commodity prices to multi year lows. Nickel prices are almost near six-year lows. Also, nickel metal inventories at London Metal Exchange (LME) which had touched an all-time high of 470,000 tons in June this year, has declined by nearly 15,000 tons since then. The production cost of more than 60% of the global nickel producers is higher than the market price of the metal. This suggests less chances of further fall in nickel prices. Also, reduction in LME inventory levels is considered as early indication of improved nickel market fundamentals, the report noted.

Depletion of ore supplies from the Philippines may lead to fall in Chinese nickel pig iron output, which is considered as a cheaper substitute for refined nickel.

The report also forecasts deficit for palladium in 2015. Moreover, the deficit is likely to widen in 2016. Norilsk also forecasts moderate deficit for platinum market in the next two years.