High-grade nickel producer Nornickel expects a 15pc increase in nickel demand this year. However, it has predicted that this rise will be offset by higher nickel pig iron (NPI) production capacity in Indonesia.
The Russian company said in a statement on Thursday that during a market review with Platinum Group Metals (PGM) and ICBC bank, nickel market estimates were revised from a surplus of 108,000mt to 76,000mt for 2020. For this year, the surplus estimate was revised downwards from 75,000mt to 52,000mt.
Increased growth in battery demand could mitigate the surplus, but the firm expects 100,000mt more of low-grade nickel in 2022.
Among the challenges that could affect nickel supply-demand dynamics this year, Nornickel listed the continued impact of the COVID-19 pandemic and the recent shortage of semiconductor chips that reduced automotive production by 2-3 million vehicles which may impact production in 2022 as well.
Still, the company stated that with the rise of electric vehicles, the long-term demand trends for nickel will remain robust due to the metal’s use in EV batteries.