Sumitomo Metal sees global nickel supply surplus widening in 2024

Panasonic Holdings

05/10/2023 09:00

By Yuka Obayashi
       TOKYO, Oct 5 (Reuters) - The global nickel market is
expected to remain in surplus next year as the output of
low-grade nickel pig iron (NPI) will continue to grow in
Indonesia, Sumitomo Metal Mining  5713.T  said on Thursday.
    The surplus will widen to 36,000 metric tons from 24,000
tons this year as Indonesia's NPI production will increase by
10.3% to 1.27 million tons, after a 16.1% rise in 2023, Japan's
biggest nickel smelter said during their half-year market
outlook presentation.
    Global demand for the metal in 2024 was seen increasing by
8.5% from this year to 3.35 million tons, while supply was
likely to climb 8.9% from a year earlier to 3.39 million tons,
the company said.
    "We expect strong demand for batteries in 2024 as the
electric vehicle (EVs) market is set to grow in China as well as
Europe," Yusuke Niwa, general manager of Sumitomo Metal's nickel
sales and raw materials department, said during the
presentation.
    "Demand for stainless steelmaking will also expand
gradually," he said.
    Nickel is mainly used in the stainless steel sector, but is
also a vital ingredient for the lithium-ion batteries used to
power EVs, where demand is set to accelerate over coming years.
    Sumitomo Metal, which supplies cathode materials for the
Panasonic  6752.T  lithium-ion batteries used in Tesla  TSLA.O 
EVs, predicted that global demand for nickel used in batteries
would rise to around 550,000 tonnes in 2024 from about 450,000
tonnes this year.
    On the supply side, Indonesia's production of NPI has surged
as a wave of new capacity powered up to meet growing demand from
the EV battery sector, capitalising on its abundant nickel
resources and government policies to encourage domestic
processing.
        NPI can be turned into matte that can be converted into
nickel sulphate for battery manufacturing. Niwa forecast that
matte output will rise by around 40,000 tons in 2024, on top of
a 50,000 tons increase this year.
    "More than 250,000 tonnes of NPI would likely be converted
to higher-grade Class-1 nickel next year," Niwa said.

 (Reporting by Yuka Obayashi; Editing by Christian Schmollinger)
 ((Yuka.Obayashi@thomsonreuters.com; +813-4520-1265;))