Nickel Surpluses: What Are They?

Overview

As of June 24, 2024, the World Bureau of Metal Statistics (WBMS) reported that nearly 97.5% of the world’s refined nickel production was consumed between January and April 2024. Only 2.5%, or about 31,000 MT, was considered surplus. But is this surplus really accessible?

Surplus Production vs. Availability

The WBMS did not specify which types of nickel, Class 1 or Class 2, are involved in this surplus. Examining the nickel stocks on the London Metal Exchange (LME) reveals that Russian nickel stocks have remained stable since January 2024 at around 24,500 MT, constituting approximately 34% of the total LME nickel stock. This suggests that only about 20,000 MT of additional production is from non-Russian sources.

Due to trading bans on Russian nickel produced after April 12, 2024, no further increase in Russian nickel stocks is expected. The LME has separately listed this in its inventory reports since May 2024.

Class 1 and Class 2 Nickel Availability

Class 1 nickel, which has a 99.8%+ Ni content, is primarily affected. Countries like New Caledonia and Indonesia, major producers of Class 2 nickel, are either out of production, facing delays in new mining licenses, or struggling with ore availability. They now rely on imports from the Philippines. The International Nickel Study Group (INSG) has reduced its forecasts for potential nickel surpluses.

In 2022, Goldman Sachs analysts predicted a renewed nickel deficit starting in 2025.

Market Dynamics: Oversupply and Shortages

The current price volatility and claims of nickel surplus may be tactics by speculators to buy nickel at low prices before a significant shortage occurs. This strategy, noted in the 2014 UN Trade & Development (UNCTAD) meeting, involves buying oversupply and selling during shortages.

Namun begitu, the actual oversupply of nickel is minimal.