With increased demand for stainless steel production and recent developments in technologies such as electric vehicles, demand for nickel is higher than ever. Unfortunately, this demand is struggling against an increasingly tightening supply of this now essential metal.
GlobalData's mining technology writer Umar Ali looks at the supply and demand conundrum.
Ali says: "In response to the risk of increasing demand tightening local supply, the Indonesian government announced a ban on the export of raw nickel ores, bringing the ban forward from 2022 to January 2020. According to GlobalData director of analysis David Kurtz, this ban is intended to produce value-added nickel products, stimulate domestic processing of ore, and make the country a hub for electric vehicle production. Indonesia is the largest global producer of nickel and a major supplier of the metal to China's stainless steel industry; in anticipation of the ban, Chinese producers are building up nickel inventories. This has increased the price of nickel significantly, with prices at the end of September 2019 reaching more than $16,000 per tonne, an increase of more than 60% from January. When the ban was announced, nickel prices increased by 8.8% to reach a peak of $18,620 per tonne, the highest price since 2014.
"The mining sector in the Philippines is expected to benefit from the supply gap created by this export ban, with the country's nickel industry having suffered in recent years. According to Kurtz, the ban in Indonesia 'paves the way for higher exports of nickel from the Philippines to China.' With China being a significant importer of nickel, particularly for its stainless steel production, the ongoing trade dispute between the US and China has had a considerable influence on nickel prices.
"With the export bans in place, nickel prices are expected to remain high while stocks remain low. However, any escalation of the trade tensions between the US and China could lead to a fall in prices, and there remains the possibility of Indonesia relaxing their export ban (as it did previously in 2017 for a ban established in 2014)."