The nickel market has seen a succession of surpluses in recent years, leading to price
weakness and an accumulation of exchange stocks. Low nickel prices caused a supply-side response, with nickel plants closing worldwide. Moreover, a ban on the export of unprocessed ores by Indonesia in 2014 and—more recently—threats of mine closures in the Philippines had raised they likelihood of widening deficits in the years ahead.
Indonesia’s ban on ore exports stimulated investment in the country. In particular, two large nickel pig iron plants were built by Chinese stainless steel manufacturers. Other, smaller, operations were also built, and several more are at the planning stage.
However, Indonesia partially reversed its export ban in early 2017, while a ministerial change in the Philippines occurred a few months after that. Both events have skewed supply-side risk to the upside.
Stainless steel accounts for around two thirds of primary nickel consumption, with the balance consumed by the alloy steel, nickel-base alloy, foundries, plating and battery industries.
Increasingly stringent environmental legislation, coupled with improving technology, are beginning to make electric vehicles viable for mass-market consumption. As a result, nickel producers are seeking to produce battery-grade material to tap into what promises to be a fast-growing market for primary nickel—albeit from a low base.