Singapore 08/10/2015 - The International Nickel Study Group (INSG) has projected a 23,000 tonnes deficit in the nickel market in 2016 - following a 49,000 tonnes surplus in 2015 - on expectations of increased consumption and slight decline in production next year.
INSG sees world primary nickel usage increasing by around 3.1 percent to 1.965 million tonnes in 2016. Global nickel consumption is expected at 1.905 million tonnes this year, up 2.3 percent from 1.863 million tonnes in 2014.
World primary nickel usage is expected to increase in both 2015 and 2016 with China continuing to be the main market for nickel, said INSG in its Wednesday press release.
World primary nickel production is forecasted at 1.942 million tonnes in 2016, down a slight 0.6 percent from INSG’s projection of 1.954 million tonnes of output in 2015. Production this year is seen down two percent from 1.994 million tonnes in 2014.
INSG noted that there is a degree of uncertainty in the production figures due to uncertainty over Chinese nickel pig iron (NPI) production. The estimates also do not include any general adjustment factor for possible production disruptions.
The Indonesian export ban on nickel ore which took effect in January 2014 has reduced NPI production in China, but increased nickel ore exports from the Philippines have enabled Chinese nickel producers to keep producing at higher levels than previously foreseen, said INSG.
In Indonesia, NPI production is expected to record an increase in 2016 due to the ramp up of new projects but overall progress in production facility build-up remains slow, it added.
Analysts have mostly agreed that the nickel deficit initially expected in 2015 will be delayed to 2016, though some have cautioned that a huge stockpile of nickel inventory in the market is likely to check price upside in the near-term and in 2016.
ANZ Research has recently estimated that there is over one million tonnes of nickel sitting in stockpiles around the word – this including over 600,000 tonnes of inventories held off-exchanges and London Metal Exchange warehouse stocks, which is currently at 446,400 tonnes.