The global nickel market is expected to remain in deficit for a third straight year in 2023 on solid demand for battery, chip-making equipment and oil-well tubular, Sumitomo Metal Mining said on Tuesday.
But the deficit will narrow to 63,000 tonnes from 108,000 tonnes this year, as low-grade nickel pig iron (NPI) output in Indonesia is expected to increase by 4.5% to 960,000 tonnes.
Sumitomo Metal, Japan’s biggest nickel smelter, said global demand for the metal was seen increasing by 7.1% in 2023 from this year to 3.14 million tonnes, while supply was expected to climb 9.0% to 3.08 million tonnes.
“We expect strong demand to continue for batteries as well as semiconductor equipment, oil-well tubular and airplanes,” Yusuke Niwa, general manager of Sumitomo Metal’s nickel sales and raw materials department, told reporters.
Sumitomo Metal, which supplies cathode materials for the Panasonic lithium-ion batteries used in Tesla electric vehicles, predicted that global demand for nickel used in batteries would rise above 500,000 tonnes in 2023 from 410,000 tonnes this year on healthy demand for EVs.
Nickel is mainly used in stainless steelmaking, but is also a vital ingredient for the lithium-ion batteries used to power EVs, where demand is set to accelerate over coming years.
Indonesia’s production of NPI is surging as a wave of new capacity powers up to meet growing demand from the EV battery sector.
NPI can be turned into matte that can be converted into nickel sulphate for battery manufacturing, but it takes time for producers and their customers to install necessary equipment, Niwa said, predicting about 200,000 tonnes of NPI would be converted to battery-grade nickel next year.
“Many forecasters are seeing a surplus in the global nickel market next year, but our view is different as we don’t think Indonesia’s producers would keep boosting output to make a surplus,” Niwa said.
