Nickel prices on the London Metal Exchange are set to record their worst performance this quarter since the same period last year, according to a recent report from S&P Market Intelligence.
Earlier, bullish investor sentiment was damped by a potentially game-changing nickel supply announcement from China's Tsingshan Holding Group Co., Ltd.
The company plans to process nickel pig iron into high-grade nickel matte (nickel matte) that can be converted to nickel sulfate for use in electric car batteries.
The company will supply products to Zhejiang Huayou Cobalt Co.Ltd. and CNGR Advanced Material Co.Ltd.
Production of 100,000 tons of nickel mattes began in October.
The London Metal Exchange three-month nickel price fell from a seven-year high of $20,110 a metric ton on Feb. 22 to $15,948 a metric ton on March 30, according to the Aoyama announcement.
That's the lowest since November 2020.
Aoyama has brought nickel pig iron to a wider market since the early 2000s, and this plan by Aoyama could trigger the most significant structural supply-side change in the global nickel market.
Aoyama also announced plans to significantly increase its nickel production in Indonesia.
As a result, we (S&P Market Intelligence) have significantly raised our global primary production forecast, projecting nickel production to rise from 2.7 million tonnes in 2021 to 3.6 million tonnes in 2025.
We (S&P Market Intelligence) expect Aoyama's supply programme to lead to an expansion of the original nickel surplus from 95,000 tonnes in 2021 to 312,000 tonnes in 2025.
This would cause the LME average nickel price for three months to fall from $17,396 a tonne in 2021 to $15,650 a tonne in 2025.
