Nickel ore being loaded at a mine in Indonesia
PERTH (miningweekly.com) – Global financial services provider Macquarie Group has called for investment into the nickel sector, despite an anticipated oversupply in the near-term.
Speaking at the Paydirt Nickel conference, in Perth, Macquarie consultant Jim Lennon said that immediate investment in the nickel sector would be required to meet the potential "explosive" demand post 2025.
“Covid-19 has obviously had a negative impact on the supply/demand fundamentals for nickel, with the market shifting from a deficit to a surplus, and these conditions could last for a few years,” Lennon said.
The Covid-19 pandemic resulted in a sharp decline in primary nickel consumption, while the first quarter of the year also saw a decline in nickel production, which Lennon said was likely owing to Covid-related disruptions in Madagascar and the Philippines.
In the first seven months of 2020, a surplus of 90 000 t was recorded, with a surplus of 135 000 t was predicted for the full year, compared with a deficit of 35 000 t in 2019.
Lennon pointed out that world nickel use was expected to fall by 7.3% in 2020.
“The market is likely to get back into balance by 2024, and will move to a deficit by 2025,” Lennon told delegates.
He pointed out that in the medium-term, the pace of growth of the stainless steel market, and the pace of uptake of nickel in the lithium battery market would determine nickel demand.