According to Investorintel, nickel prices have had a strong year in 2022, rising 43% to reach $28,199 per tonne at the time of writing. This increase has been driven by strong demand and limited new supply in the market.
Looking ahead to 2023, the nickel market is expected to remain tight, although some analysts are concerned about potential new supply from Indonesia. Sumitomo Metal Mining has forecast small deficits in the nickel market for 2022 and 2023, particularly in the battery sector, although there may be a potential oversupply of nickel pig iron in 2023. Nickel pig iron is a low-grade ferronickel often used as a cheaper alternative to pure nickel in the production of stainless steel in China.
Why it matters
In the longer term, demand for nickel is expected to increase significantly, with the International Energy Agency forecasting that demand will rise by 7-19 times from 2020 to 2040. This increase will be driven by both traditional demand for use in stainless steel and growing demand for batteries, particularly for electric vehicles. Not all batteries will use nickel, but nickel, manganese, and cobalt cathode batteries are expected to remain dominant on Western markets due to their high energy density and long-cycle life. To meet this demand, the IEA has forecast that 60 new nickel mines will be needed by 2030.
Among the leading global nickel producers, Vale, Norilsk Nickel, Glencore, and BHP Group are some of the companies to watch in 2023. Vale, the second-largest producer in 2020, has key assets in Canada and supply agreements with major automakers, including Tesla and General Motors. Norilsk Nickel was the top global producer in 2020, although as a Russian firm the company has faced challenges in 2022 and its nickel is currently suspended from Western stock exchanges. Glencore ranked as the third-largest producer in 2020, while BHP Group, the fourth-largest producer in 2020, is ramping up operations at its Nickel West mine in Western Australia and has announced a takeover offer for OZ Minerals, which holds an option to acquire the copper, gold, and cobalt-containing Kalkaroo Project in South Australia.