TOKYO - The global nickel market is expected to remain in surplus next year as the output of low-grade nickel pig iron (NPI) will continue to grow in Indonesia, Sumitomo Metal Mining said on Thursday.

The surplus will widen to 36 000 t from 24 000 t this year as Indonesia's NPI production will increase by 10.3% to 1.27-million tons, after a 16.1% rise in 2023, Japan's biggest nickel smelter said during their half-year market outlook presentation.

Global demand for the metal in 2024 was seen increasing by 8.5% from this year to 3.35-million tons, while supply was likely to climb 8.9% from a year earlier to 3.39-million tons, the company said.

"We expect strong demand for batteries in 2024 as the electric vehicle (EVs) market is set to grow in China as well as Europe," Yusuke Niwa, general manager of Sumitomo Metal's nickel sales and raw materials department, said during the presentation.

"Demand for stainless steelmaking will also expand gradually," he said.

Nickel is mainly used in the stainless steel sector, but is also a vital ingredient for the lithium-ion batteries used to power EVs, where demand is set to accelerate over coming years.

Sumitomo Metal, which supplies cathode materials for the Panasonic lithium-ion batteries used in Tesla EVs, predicted that global demand for nickel used in batteries would rise to around 550,000 tonnes in 2024 from about 450 000 t this year.

On the supply side, Indonesia's production of NPI has surged as a wave of new capacity powered up to meet growing demand from the EV battery sector, capitalising on its abundant nickel resources and government policies to encourage domestic processing.

NPI can be turned into matte that can be converted into nickel sulphate for battery manufacturing. Niwa forecast that matte output will rise by around 40 000 t in 2024, on top of a 50 000 t increase this year.

"More than 250 000 t of NPI would likely be converted to higher-grade Class-1 nickel next year," Niwa said.