The global nickel supply is heading for a bigger surplus this year as more Indonesian smelters feeding EV battery and stainless steel industries come onstream, threatening to keep prices below the record highs of 2022.
Prices rose to new heights last year after Russia -- another major nickel producer -- invaded Ukraine, and on the back of rising demand for so-called Class 1 nickel used in electric vehicle batteries. Class 1 nickel has a higher purity than its Class 2 counterpart, which is commonly used in stainless steel production.
However, nickel production also began outstripping demand again in 2022, as Chinese-backed smelters in Indonesia rapidly increased their output of nickel pig iron and ferronickel -- used as feedstocks in stainless steel production -- while a slowing global economy muted stainless steel demand, analysts said.
The market is "heading for a larger surplus in 2023" and "will not see a deficit before 2028," Ellie Wang, Shanghai-based analyst at consultancy CRU Group, told the Indonesia Miner conference last week.
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