Nickel Prices Experience a Mild Decline as Indonesia Bolsters its Supply Capabilities.

Nickel Prices Soften Amid Indonesia Supply Boost. But Growing Demand EV Batteries Keeps Prices Above Pre-Pandemic Levels. Producers of electric vehicle batteries and the automobiles powered by them have reaped the rewards of Indonesia's escalating production, as the country emerged as the foremost supplier of nickel, a pivotal constituent of batteries, which experienced a remarkable surge in worth during the previous year.

Key TakeAway

• The price escalation of nickel experienced in the previous year has subsided as Indonesia escalated its production levels.
• Analysts predict a further increase in the surplus of this metal, which is an essential element in electric vehicle batteries, throughout the current year.
• The upsurge in prices during 2022 can be attributed to Russia's invasion of Ukraine.
• Nickel prices continue to remain elevated when compared to the pre-pandemic period.

Nevertheless, nickel prices continue to remain significantly higher than pre-Covid-19 levels. Moreover, it has been reported that the foremost international energy organization is contemplating the development of guidelines to address the disruptions in the supply of rare earth minerals, which are utilized in electric vehicle batteries.

According to recent statements made by analysts at a major mining conference in Indonesia, the surplus in the global nickel market is expected to expand this year and persist until at least 2028.

This surplus represents a notable deviation from early 2022 when nickel prices experienced a sudden surge following Russia's invasion of Ukraine, a crucial global supplier. In the weeks following the invasion, global prices soared by 40-45%, reaching their highest point since mid-2007.

Nevertheless, Indonesia effectively bridged the supply deficit by significantly increasing its production levels. As the foremost global producer of nickel ore, the country achieved a remarkable 54% surge in production during the past year. Consequently, Indonesia's output contributed to nearly half of the world's overall nickel production, amounting to 3.3 million metric tons, reflecting a substantial 21% rise compared to the previous year.

Top Nickel Producers Worldwide

Nickel output by nation by year in metric tons

The most recent projection is likely to alleviate concerns for electric vehicle battery manufacturers and carmakers. Depending on the specific battery type, nickel constitutes 50-80% of the minerals used in electric vehicle cathodes, which, in turn, make up approximately 30% of an electric vehicle battery's total weight.

Despite the surge in production witnessed last year, prices remain relatively elevated. Spot prices on the global market fell below $20,000 per metric ton this week, a decline from the $30,424 mark at the beginning of the year and nearly $34,000 in March 2022. Nevertheless, they continue to stand 50-60% higher than the levels observed just before the onset of the Covid-19 pandemic.

The higher prices observed post-pandemic, coupled with the supply disruption experienced last year, indicate the growing demand for electric vehicle batteries.

Ellie Wang, an analyst based in Shanghai from the consulting firm CRU Group, forecasts that global nickel demand will reach 4.3 million metric tons annually by 2027, marking a 43% increase from the 3 million metric tons recorded a year ago and a 30% surge compared to last year's global production.

The increasing demand for electric vehicle batteries has put significant pressure on the world's suppliers of rare earth minerals, including nickel, cobalt, manganese, and lithium.

Consequently, it has been reported that by the end of this year, the International Energy Agency (IEA) will introduce guidelines aimed at reducing reliance on a single mineral supplier through limits on imports.

Given that the supply of rare earth minerals is often concentrated among a limited number of sources, the IEA is reportedly considering guidelines that mandate collaborative procurement beyond specific predefined import thresholds.