Nornickel expects a 130,000mt surplus in global nickel balances at the end of 2020, the company indicated in its forecast for the market on Thursday.
Demand for nickel during this period could drop by 7pc annually because of an anemic stainless-steel sector that consumes close to 70pc of the world’s nickel production.
Nickel demand is expected to fall by 6pc particularly for the stainless-steel sector, the Nornickel analysis indicated, dropping close to 13pc in the Europe Middle East and Africa (EMEA) region and the Americas due to prolonged COVID-19 related shutdowns in these countries.
Nickel demand in China is expected to drop by 4pc as the country saw a swift recovery from the pandemic and has its economy up and running. However, COVID-19’s effects could drop nickel pig iron production in the country by 1pc, which could be offset by an increase in nickel pig iron production in Indonesia.
Nornickel remains confident about the long-term prospects for nickel demand from the Neighbouring electric vehicles (NEV) market, but has warned that NEVs have seen a significant fall due to lack of consumer confidence in the product recently, which could result in a 15pc decrease in demand for nickel in NEV batteries in the short-term.
A 7pc fall in demand for plating products because of automotive production declines, as well as a 9pc drop in both special steel and standard alloys demand in EMEA and Americas could impact the consumption of nickel for these products. A fall of around 10pc in demand for superalloys will also affect nickel consumption, the Nornickel analysis pointed out.
Demand for nickel is likely to recover once the stainless-steel and NEV industries are back on track with the help of favorable government policies across the world.