Global demand of nickel used in batteries is expected to rise 18% this year from 2020, backed by strong sales of electric-vehicles (EVs) in China, Sumitomo Metal Mining, Japan's biggest nickel smelter, said on Tuesday.
Sumitomo Metal, which supplies cathode materials for Panasonic lithium ion batteries that are used in Tesla EVs, said demand of nickel used in rechargeable batteries will increase to 228 000 t in 2021 from 193 000 t in 2020.
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.
"Sales of EVs are growing very fast, especially in China, despite the Covid-19 pandemic," Yusuke Niwa, general manager of Sumitomo Metal's nickel sales and raw materials department, told reporters.
"The recent drawdown in LME's nickel stocks is seen to reflect rising demand for the metal used in batteries," he said, pointing to a drop by more than 30 000 t over the past two months.
The company also predicted that a global nickel market surplus will narrow to 58 000 t this year from 132 000 t in 2020 as robust demand from the stainless steel sector will offset higher output of nickel pig iron (NPI) in Indonesia.
Global demand for nickel is seen increasing by 9.2% in 2021 to 2.58-million tonnes, while supply is expected to climb by 5.8% to 2.638-million tonnes.
During the first four months of the year, the global nickel market saw a deficit of 34,900 tonnes, the International Nickel Study Group said.
"But we expect a surplus later this year as more projects for NPI production in Indonesia will start up," Niwa said.
Japan's demand for nickel is projected to rise 15.7% to 167 400 t, while supply is forecast to fall 2.4% to 165 800 t.