Global nickel production growth to slow in 2020

CHANGSHA, Oct 24 (SMM) – Global nickel production growth is expected to slow down in 2020, as nickel pig iron production in China will be affected by raw material supply shortages after Indonesia bans exports of raw nickel ore from January 2020.

"Worldwide production of primary nickel is estimated to grow 5% to 2.58 million mt in nickel content next year, decelerating from an increase of 11% in 2019," said SMM nickel analyst Gao Yin at the SMM Lithium Battery Summit in Changsha, Hunan province.

Supply from China and Indonesia accounts for nearly 50% of the total volume globally, and NPI will be the major driver of nickel production growth.

In early September, Indonesia confirmed that it will accelerate the ban on raw nickel ore exports. This sparked fears of supply shortfalls and bolstered ore prices, which may lead to the production curtailments of high-cost NPI capacity.

In 2020, demand of Ni content of laterite nickel ore from Chinese NPI producers is estimated to be around 630,000 mt, according to SMM calculations based on existing capacity in operation and operating rate in September. 

This will far exceed an estimated supply of 433,000 mt in Ni content, which means that China NPI production will likely decline to 430,000 mt in Ni content next year, after soaring 29% to 590,000 mt in 2019 on high profits and an easing in environmental protection-driven restrictions.

The suspension of high-grade laterite nickel ore supply from Indonesia will also lower the Ni grade of NPI that are produced in China from the current 9.5-10% to below 8%.

NPI capacity spike in Indonesia, however, will help offset the supply reduction from China.

In face of slower production growth, nickel demand growth will maintain high speed as stainless steel production will expand following the commissioning of a slew of new projects in China and Indonesia. It is expected that a bigger nickel supply deficit may happen globally next year.

The pursuit of high-nickel batteries will also help boost demand for nickel, as the auto industry is embracing electrification.

Gao also expects nickel prices to rise to an annual average of $16,500/mt in 2020.