Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Market research firm Fitch Solutions has upgraded their outlook for nickel prices for 2021 to $15,750/mt from $15,250/mt. At present, prices are around $18,180/mt but are likely to drop as supply is set to increase. 

Surplus supply will pressure prices but demand will also as economies recover. Prices climbed led by market optimism and bullish expectations about nickel supply and weakening dollar which pushed prices further up. 

Fitch forecast a bearish outlook for nickel in 2021 compared to the prior year’s average of $18,140/mt. This is on the back of rising supply which is likely to narrow the deficit, therefore, Fitch is maintaining lower prices. In the long term, nickel prices are expected to remain on a gradual uptrend as global markets would be under-supplied, according to Fitch. 

Demand is set to rise over a longer period as China’s construction sector is forecast to grow at an average of 3.8pc in 2021-2029 compared to prior-decade. Nickel demand will also rise as the need for batteries will increase with production of electric vehicle. 

The recent nickel matte supply deal between Tsingshan Holding Group, Huayou Cobalt and CNGR Advanced Material will likely ease near-term supply concerns, with the scope of Class 1 nickel supply risk depending on the technology behind the company’s nickel matte processing. Based on the Tsingshan supply deal, Fitch maintains a positive outlook for Indonesia’s expanding role in the electric vehicle battery supply chain. Fitch expects high-pressure acid leach nickel smelting projects in Indonesia. 

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