Indonesia Leads Nickel Supply and Demand Growth
October 2018
A finished nickel market deficit of 142kt is forecast in 2018 on continued strong demand growth of 6.9% to 2.34Mt and production growth of 6.7%. In 2019, the market is forecast to return to balance with a small finished nickel surplus of 26kt.

A supply deficit of 32kt is forecast. Modest price improvement is forecast after the September Quarter average declined 8% quarter on quarter to US$13,291/t (US$6.03/lb) largely because of uncertainty over the impact of the escalating trade dispute between the US and China, and other US trading partners, on global economic growth and demand for base metals.

The nickel price averaged US$12,543/t (US$5.69/lb) in September, down 6.6% month on month. This was the third consecutive monthly decline. Exchange stockpiles continue to decline in September. LME stocks were drawn down by 10.2kt to 238.8kt and SHFE stocks declined by 1.3kt to just 11.9kt. At the end of September, exchange stocks were down by 159kt since the start of 2018.

Global primary finished nickel demand is forecast to post a 6.9% rise in 2018 to 2.34Mt. This is the third year of strong demand growth after increases of 8.4% in in 2016 and 7.8% in 2017. In 2019, growth will ease to 3.9%, lifting total demand to 2.49Mt. Indonesia leads demand growth as Tsingshan ramps up stainless steel production at the Indonesia Morowali Industrial Park (IMIP) towards a planned 3.0Mtpa capacity.

Development and M&A activity is buoyant. Nickel Mines is spending US$70m to lift its interest in the two-line RKEF plant under construction within the Indonesia Morowali Industrial Park by 35% to 60%. Panoramic Resources is selling its idled Lanfranchi mine in Western Australia to US-based Black Mountain Metals for A$15.1m (US$10.6m). Thakuda Battery Metals has commenced construction of a 25ktpa, ZAR250m (US$17m) battery-grade nickel sulphate plant in South Africa. Following the grant of a Mining Lease over the San Jorge laterite deposit in the Solomon Islands, Axiom plans to soon start mining of direct shipping ore and make the first ore shipment in the March Quarter of 2019.