Nickel markets have been underwhelming the past couple of years as an oversupply of the base metal exceeded demand. It was a trend that continued through the last quarter of 2024.
Indonesian supply was the primary force preventing a breakout in the nickel markets. The country continued to be the largest global source, with much of its nickel destined for Chinese-owned refineries in the country.
However, oversupply was also met with weak demand, as China’s economy continued to sputter after the COVID-19 pandemic. The Chinese housing and manufacturing markets are important demand drivers for nickel, which is used in stainless steel products.
Nickel reached its 2024 peak of US$21,615 per metric ton on May 20, but was back below the US$16,000 mark by the end of July. Following some volatility in August and September, the price of nickel gained momentum at the end of Q3, reaching US$18,221 on October 2.
However, the increased prices were not to last, and nickel spent much of the final quarter in a downward trend.
By the end of October, the price had fallen to US$15,732 before climbing back to US$16,607 on November 7.
Since then, the nickel market has seen some volatility but has continued its downward trend. On December 19, it slumped to its 2024 low of US$15,090. However, it saw some small gains, ending the year at US$15,300 on December 31.
Nickel’s weak prices are largely due to high output from Indonesia and low demand, particularly from Asian markets, as China’s recovery has failed to gain traction.
Indonesia had previously worked to distance itself from China’s partnerships as it sought to improve relations with the United States and be included under the US Inflation Reduction Act (IRA).
The story since the start of the year has been high output from Indonesian operations.
The second quarter was defined by a surge in nickel prices.
At the time Joe Mazumdar, editor of Exploration Insights, suggested this move would have little impact on the sector.
“That nickel is still going to make it into the market, it’s just going to go to a different exchange, probably Shanghai … So I could still see that nickel moving and getting consumed in the global market — it’s just not coming to the west,” he explained to the Investing News Network in an interview.
Ultimately, by the end of the quarter, the price was trending toward US$17,000.
Nickel saw a strong end to the third quarter with the price rising above the US$18,000 mark.
The announcement came alongside cuts at Chinese smelters as they were forced to deal with a shortage in feeder supply due to more delays to Indonesia’s permitting and quota system.
The nickel market is expected to remain oversupplied for some time.
With China’s economy on a slow path to recovery, demand will remain weak. Meanwhile, supply will likely hinge on if Indonesia chooses to make significant cuts to supply output.
Even with the increased demand from the battery sector, nickel is primarily used in stainless steel products, which are still dominated by the Chinese manufacturing and real estate sectors.
Perhaps the most significant factors to consider are political. A new administration in the United States and a shift in the IRA’s approach to sourcing critical metals like nickel could alter the landscape for nickel producers in 2025.
Securities Disclosure: I, Dean Belder, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
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