Sumitomo Metal forecasts widening global nickel supply surplus in 2025

Sumitomo Metal Mining

09/10/2024 11:26

By Yuka Obayashi
       TOKYO, Oct 9 (Reuters) - The global nickel market is
poised for a larger surplus next year, driven by continued
production expansion in Indonesia, Japan's largest nickel
smelter Sumitomo Metal Mining  5713.T  said on Wednesday.
    The surplus will widen to 104,000 metric tons from 86,000
tons this year as Indonesia's output of low-grade nickel pig
iron is expected to rise by 11.3% to 1.67 million tons, SMM said
during its half-year market outlook presentation.    
    The country's production of high-grade nickel is also
forecast to grow, it added.
    Global demand for the metal in 2025 was seen increasing by
7.1% from this year to 3.55 million tons, while supply was
likely to climb 7.4% to 3.65 million tons, SMM said.
    Supply and demand in a lower purity form of so-called Class
2 nickel is expected to be roughly balanced next year despite
higher NPI supply from Indonesia, SMM executive officer Yusuke
Niwa said.
    "But we expect a surplus in (the almost-pure) Class 1 nickel
due to output expansion by Indonesia's new smelters," he said.
    Nickel is primarily used in the stainless steel sector, but
is also a critical component in lithium-ion batteries that power
electric vehicles, where demand is set to surge in the coming
years.
    SMM, which supplies cathode materials for the Panasonic
 6752.T  lithium-ion batteries used in Tesla  TSLA.O  EVs,
predicts that global demand for nickel used in batteries will
grow to around 520,000 tons in 2025 from about 470,000 tons this
year.
    However, Niwa expressed caution about the outlook, noting:
"The EV market environment looks quite difficult, except in
China."
    "While we anticipate next year's demand to grow by 50,000
tons from this year... there is a possibility it may fall short
of that projection," he added.

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