Investing News Network

2023 Nickel Outlook: Australia Edition

Table of Contents

Nickel Price 2022 Year-End Review

Nickel Price Forecast: Top Trends That Will Impact Nickel in 2023

Nickel Price Update: Q1 2023 in Review

Nickel Price Update: Q2 2023 in Review

Top 5 ASX Nickel Stocks

Nickel Price 2022 Year-End Review

Click here to read the previous nickel price update.

After climbing to a historic high in the first quarter of the year, surpassing US$100,000 per metric ton (MT), nickel retreated substantially to trade in the US$20,000 range for most of 2022.

The price surge resulted in a suspension of trading on the London Metal Exchange (LME) in early March. At the same time, the Russia-Ukraine war put pressure on prices, while all eyes remained on supply coming online from Indonesia.

For investors interested in nickel, here the Investing News Network (INN) looks back at nickel trends for 2022, including supply and demand dynamics, how the metal performed and what analysts said quarter by quarter.

What were the main factors that impacted the nickel market in 2022?

Nickel price in Q1 : LME meltdown hits the sector

After finishing 2021 trading above the US$20,000 threshold, nickel prices hit their highest level in a decade in mid-January as stockpiles dwindled and potential demand from the electric vehicle (EV) sector supported prices.

The base metal continued to trade higher in February, reaching another milestone as it surpassed the US$25,000 level, partially due to uncertainty hitting markets from Russia’s invasion of Ukraine.

Russia is responsible for 9 percent of global nickel output and 15 percent of Class I nickel supply — on which Europe heavily relies.

“If we do see sanctions placed on metal exports or Russian producers, there is very little alternative supply that could feed Europe in the near to medium term,” Natalie Scott-Gray of StoneX told INN. “This is particularly true for Class I nickel, which would have a direct impact on the ability for Europe to maintain EV production guidance for this year.”

But nickel’s price rise during the first quarter was far from over. On March 8, nickel steeply spiked to hit a record level of US$100,000 before the LME decided to suspend trading. “Fundamentals, though supportive of stronger prices, do not justify this frenzy,” Wenyu Yao, senior analyst at ING, said in a note on March 8. “It remains to be seen how this crisis ends. However, the market has long been faced with structural issues.”

Nickel's price performance year-to-date.

Chart via the London Metal Exchange .

The largest-ever move seen on the LME was attributed to the massive short position held by Chinese tycoon Xiang Guangda, who controls the world’s largest nickel producer, Tsingshan Holding Group; he was facing billions of dollars in mark-to-market losses.

The 145-year-old exchange resumed trading, although not without some hiccups , with UK regulators planning to launch a review of the “disorderly market” in nickel contracts in March.

“We expect the LME nickel price to remain volatile in the near term, as the global nickel market finds equilibrium following the price spike and subsequent events,” Jason Sappor, senior research analyst with S&P Global Market Intelligence, told INN back in March.

Looking over to nickel demand, the market was already seeing less need within China for stainless steel and EVs, and any further extension of COVID-19 lockdown measures in the Asian country was expected to exacerbate the situation.

“A prolonged (Russia-Ukraine) war will also hurt the demand profile within Europe for nickel, in addition to stretching out supply chain pain given elevated freight rates,” Scott-Gray said earlier in 2022.

At the end of the quarter, nickel prices were trading above US$30,000.

Nickel price in Q2 : Prices fall sharply

With global economic recession fears increasing, nickel prices fell throughout Q2, recording three consecutive monthly losses.

“Although the LME nickel 3-month price has been trending lower since nickel trading on the LME restarted mid-March, the price is still up 7.9 percent since end-2021, finding support from the continued drawdown in Class 1 nickel stocks at exchange warehouses,” Sappor said at the time in a report.

Speaking about nickel in Q2, Sean Mulshaw of Wood Mackenzie said he expected prices to retreat a little faster than they did.

“We are now broadly back where we started pre-LME trading halt,” he told INN in late June. “We expect a downward trend in nickel prices over the rest of this year and, given where we are now, we could be heading below US$22,000 in Q3.”

Commenting on demand from China in the second quarter, Mulshaw said it was weaker than expected on the back of the COVID-19 outbreak. But even now, as restrictions are easing, the rebound is not as strong as forecast.

“Stainless steel production rates have been falling since March, and this will continue at least through July,” he explained. “Generally, with nickel prices falling, and therefore stainless prices, stainless customers have become cautious, not wanting to buy a product that then loses value. So orders have dropped.”

On the supply side, StoneX modestly increased its forecast, with record levels of nickel pig iron (NPI) production and ex-NPI production in Indonesia. Output levels were being lifted in the country by the expansion of NPI to nickel matte and continued growth in high-pressure acid leach production.

“Although we do factor in a potential downside risk coming from Russian production, given the ongoing war,” Scott-Gray said. StoneX's belief was that the European Union likely wouldn't place an export ban on Russian nickel.

Nickel prices ended the quarter trading at US$22,698, declining more than 31 percent since the beginning of April.

Nickel price in Q3 : Market stabilizes

The third quarter was dominated by volatility, with nickel reaching its highest point of the period on September 21, when it almost broke the US$25,000 threshold. But prices were unable to hold on to gains, retreating to end the quarter at US$21,107.

Speaking with INN about the main trends seen in the nickel market in Q3, Adrian Gardner of Wood Mackenzie said prices performed as expected, with considerably more stability than seen over the past eight months.

“Push-pull price factors largely canceled each other out, giving small differences between lows-highs of monthly averages,” he said.

For Wood Mackenzie, a significantly weaker stainless steel sector across all major consuming areas had been having a negative impact on primary nickel demand since April.

“This weakness will probably extend into Q4 2022, leaving growth profiles for Q1 2023 in doubt also,” Gardner said.

Nickel is also a key element used in cathodes for electric vehicle batteries, with many believing demand from this sector will increase significantly in the coming decades.

“Primary nickel demand from the batteries sector, especially in China, which controls about 80 to 85 percent of nickel demand in battery precursors, has been much stronger than expected, and Q4 2022 appears to remain on the same track,” Gardner said.

World primary nickel production was 2.49 million MT in 2020 and 2.61 million MT in 2021, and is forecast to reach 3.08 million MT in 2022, mainly due to expected increases in Indonesia and China, as per the International Nickel Study Group.

All in all, the nickel market is set to record a moderate surplus in 2022 upon outright contraction in the largest end use — stainless steel — despite healthy growth in the fastest-growing market — electric vehicles — according to StoneX.

“Meanwhile, production is set to post a record on capacity additions of NPI within Indonesia and alternative routes of Class I production, such as high-pressure acid leach and NPI to nickel matte,” Scott-Gray, the firm's senior metals analyst, said.

Nickel price in Q4: Volatility takes the lead

Nickel’s performance in the fourth quarter so far has been in an upward trend, with prices breaking the US$30,000 level.

ING’s Ewa Manthey said the metals complex has had a volatile year, but nickel is the standout across the complex, managing to hold onto year-to-date gains.

“Still, the LME price is down significantly from its year-to-date highs in March following a short squeeze, as recession fears have undermined market sentiment,” she said. “Volatility in the nickel market has become more common in recent months, with reduced liquidity ever since the short squeeze seen back in March.”

In November, nickel prices soared to their highest level since the LME meltdown in March, which traders attributed to the low liquidity in the exchange since the unprecedented price spike earlier this year.

“The market is still very thin. What we’ve seen is the effects of low liquidity play out right in front of us,” said Geordie Wilkes , head of research at Sucden Financial, a metals brokerage.

For its part, the LME said has undertaken “enhanced monitoring” of market participants’ trading activities in order to stabilize the volatility seen in recent weeks.

"The LME notes the current volatility in nickel," the exchange said. "The price limits in place are functioning as expected and the LME is undertaking enhanced monitoring to ensure that participants' trading activities are being conducted appropriately."

Manthey said she expects more near-term volatility to continue until the LME rebuilds trust in the benchmark nickel contract, volumes pick up again and the market’s confidence in it recovers.

“We forecast nickel prices to remain under pressure in the short term as a surplus in the market builds; however, the tightness in the Class 1 market is likely to offer some support,” she added.

On December 7, nickel was trading at US$31,441, up from its starting point at US$20,888 on January 3.

Don’t forget to follow us @INN_Resource for real-time news updates.

Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

Additional information on Australia stock investing — FREE

Nickel Price Forecast: Top Trends That Will Impact Nickel in 2023

Pull quotes were provided by Investing News Network clients Canada Nickel Company and Nova Royalty . This article is not paid-for content.

Nickel’s price volatility in early 2022 made news headlines, shaking the industry as the important base metal surpassed the historic US$100,000 per metric ton (MT) level for the first time ever.

Although the market is struggling to stabilize, stainless steel looks set to remain its main demand driver for some time; however, interest in nickel’s use in electric vehicle (EV) batteries is quickly picking up pace.

As the year comes to a close, the Investing News Network (INN) asked analysts in the field for their thoughts on what’s ahead for the commodity. Read on to find out what they had to say.

How did nickel prices perform in 2022?

Nickel's unprecedented price increase in Q1 , which sent it up over 250 percent in just two days, prompted the suspension of trading at the London Metal Exchange (LME). The 145-year-old exchange resumed trading in mid-March after canceling some of the trades, with prices retreating to trade at around US$22,000 by mid-year — almost the same level at which they started in 2022.

Nickel's price performance year-to-date.

Chart via the London Metal Exchange .

During the first months of the year, the market saw a downgrade to demand within China for both stainless steel and EVs, with any further extension of COVID-19 lockdown measures expected to exacerbate the situation.

“Generally, with nickel prices falling, and therefore stainless prices, stainless customers have become cautious, not wanting to buy a product that then loses value. So orders dropped,” Sean Mulshaw of Wood Mackenzie told INN at the time.

The third quarter proved to be stable for nickel prices, which ended the period almost neutral.

“Tightening monetary policy globally, the fallout from the war in Ukraine, a wobbly property sector in China and a new Covid-19 outbreak in Shenzhen all hurt activity,” analysts at FocusEconomics said. “That said, lower nickel stocks in LME warehouses provided some lift to nickel prices.”

In November, prices saw an uptick as volatility increased, with the LME stepping in to scrutinize trading.

ING’s Ewa Manthey told INN that this volatility is likely to continue until market participants feel they can trust the LME's benchmark nickel contract again. “We forecast nickel prices to remain under pressure in the short term as a surplus in the market builds; however, the tightness in the Class 1 market is likely to offer some support,” she added.

On December 7, nickel was trading at US$31,441, up from its starting point of US$20,888 on January 3.

What is the nickel supply and demand forecast for 2023?

At the end of 2021, most analysts expected the nickel market to remain balanced in 2022, with strong prices forecast for the base metal. However, weak stainless steel sector demand has changed the situation.

With the year nearly over, Manthey said it now looks like the global nickel market will record a surplus, although it will be mostly in the Class 2 market, which includes ferronickel and nickel pig iron .

“The LME deliverable Class 1 market has been relatively tight, with LME stocks falling by around 50,000 tonnes since the start of the year and recently hitting a 14 year low. The reported LME stocks are now below three weeks of consumption — another factor driving the price swings in the LME nickel contract," she said.

Nickel is a key cathode material for EV batteries, and many believe demand from this sector will increase significantly in coming decades. But for now EVs account for a relatively small segment of demand, well below stainless steel, which is responsible for 70 percent of consumption. “Although demand from the battery sector is growing rapidly, making up around 5 percent of total demand at the moment, it isn’t enough to offset a slowdown in traditional sectors like construction,” Manthey said.

Speaking further about demand, she pointed out that nickel is one of many metals whose usage has been hurt by China’s strict zero-COVID policy, which has dampened the construction industry. “China’s relaxation of its COVID policy would have a significant effect on the steel market, and by extension on the nickel market,” Manthey said.

Looking over to supply, Indonesia will be key to watch as it boosts production to meet demand. Citing data from the International Nickel Study Group, Manthey noted that the country's output rose 41 percent year-on-year in the first seven months of 2022, with its output of 814,000 tonnes accounting for 47 percent of supply globally. That's up from 38 percent over the same period of 2021.

“We believe rising output in Indonesia will pressure nickel prices next year,” she said, pointing out that the US Geological Survey sees the nation producing 1.25 million to 1.5 million tonnes of nickel this year, over 40 percent of world mined production.

For Rodney Hooper of RK Equity , nickel is the metal to be watching next year. “A lot of people, when they originally had quite conservative estimates on EV sales, didn't have EVs as a major component of the nickel market,” he told INN. “But of course, that's all turned on its head and now EVs represent a big percentage of nickel demand, and they will continue to rise going forward.”

Permitting times are one of the main challenges that upcoming nickel projects continue to come up against.

“Funding (for battery metals projects) has happened, but it's not happening still at a rate that anyone needs; institutional money is still not as aggressive as it should be,” Simon Moores of Benchmark Mineral Intelligence told INN. “And then, if they get the money to take it to the permitting stage, permitting is a massive hurdle — it can add 50 percent of the time onto building your mine.”

As governments continue to push to take further control of their lithium -ion battery supply chains, including sourcing raw materials regionally, the US, Canada, Europe and even Australia have been moving forward with critical minerals strategies, which are expected to address mining, among other issues.

What factors will move the nickel market in 2023?

In closing, Manthey reiterated that ING expects short-term pressure for nickel due to a surplus in the market, but said prices should see some support from tight conditions for Class 1 material.

“We see prices hovering between US$20,000 and US$20,500 over the first two quarters of 2023 before gradually increasing to US$21,000 in 3Q and US$22,000 in 4Q as the global growth outlook starts to improve,” Manthey said.

Looking at catalysts to keep an eye out for in 2023, analysts at FocusEconomics believe a global economic recession is a key downside risk to prices, while potential disruption to Russian nickel supply — either because of western sanctions or Russian export controls — is an upside risk for the metal.

“The resilience of the Chinese economy and the country’s handling of new COVID-19 outbreaks are key factors to watch,” they said. “In the long run, the rise of EVs bodes well for demand, as nickel is an important component in lithium-ion batteries.”

Panelists polled by FocusEconomics see nickel prices averaging US$21,559 by the end of 2022 and US$20,366 by the end of 2023.

Don’t forget to follow us @INN_Resource for real-time news updates!

Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

Additional information on Australia stock investing — FREE

Nickel Price Update: Q1 2023 in Review

Nickel prices declined more than 20 percent in the first three months of the year, and uncertainty and volatility are expected to continue rocking the sector as 2023 moves ahead.

Increasing supply from Indonesia and a slower-than-forecast demand rebound from China hit the market in Q1, creating a slowdown at a time when the industry is still recovering from last year’s London Metal Exchange (LME) meltdown.

What else happened to nickel in the first quarter of this year? Read on to learn what experts told the Investing News Network (INN) about supply and demand dynamics and what they're expecting for the rest of the year.

How did nickel prices perform in Q1?

Nickel prices kicked off the year trading at the US$30,000 per metric ton (MT) level, hitting their highest point of the quarter on January 3 at US$31,118.

Nickel's Q1 2023 price performance.

Chart via the London Metal Exchange .

But the nickel market remained in a surplus during the first three months of 2023, with slightly lower-than-expected demand from top metals consumer China impacting prices.

“Nickel prices have remained volatile in 2023 with the US dollar strength and fears of a potential US banking crisis driving prices lower in the past month,” Ewa Manthey of ING told INN.

The base metal was unable to sustain gains throughout the three month period, falling steadily to reach its lowest quarterly mark on March 23, when it was changing hands for US$22,517.

“March’s double-digit percentage decline was likely driven by an adjustment between LME prices for Class 1 nickel and prices in the larger lower-grade nickel market,” FocusEconomics analysts said in their latest report. “Many analysts argue that the gap between the price of lower-grade nickel and the LME price has become too wide for the latter to be used in trades.”

Nickel market participants remain focused on what's ahead for the LME contract — the exchange had to suspend trading last year after prices climbed to US$100,000. Adding to the lack of liquidity it has been experiencing, the LME said in March that it discovered bags of stones instead of nickel in one of its warehouses.

“There remains considerable doubt regarding trust with the LME nickel contract,” Adrian Gardner of Wood Mackenzie told INN. “I doubt this sentiment will change until the court cases currently underway are concluded, and that will take months.”

For her part, Manthey expects LME nickel liquidity to remain thin, with prices staying volatile in the near term until the LME restores market confidence in its nickel contract.

“These illiquid trading conditions will continue to exacerbate the bearish drivers for nickel,” she said.

Prices closed the quarter trading at US$23,838, 20.6 percent lower than where they started the year.

“Prices ended up slightly softer than we expected,” Gardner said. In mid-December 2022, the firm was calling for a Q1 LME cash average price of US$27,190, but it ended up at US$26,065.

Nickel supply and demand dynamics in 2023

At the end of last year, analysts were expecting the nickel market to remain under pressure as a surplus in the market built up.

Production of stainless steel accounts for around 70 percent of nickel demand, and this is largely fueled by developing countries in the midst of infrastructure expansions. But Chinese demand during Q1 did not pick up as strongly as analysts had expected.

“In Europe and North America, stainless steel production has been tepid at best, and scrap utilization rates have been high, reducing the demand for primary nickel products,” Gardner said.

Demand was also not as strong for the battery segment. Nickel is a key element used in cathodes for electric car batteries, and many believe demand from this sector will increase significantly in the coming decades.

“China will be the key driver of nickel demand this year, helped by the reopening of its economy, with pent-up consumer demand expected to drive the country’s economic recovery,” Manthey said.

During the second quarter. Wood Mackenzie expects to see an 8 percent global demand growth compared to the first three months of the year, reaching 830,000 MT.

“That will be another quarterly global demand record, beating the prior record of 780,000 tonnes set in Q4 2022,” he said. “However, with refined supply also setting a new record at 870,000 tonnes, Q2 will still see a surplus in the market.”

Last year, Indonesia remained by far the largest producer of nickel, followed by the Philippines and Russia.

US Geological Survey data shows that estimated global nickel mine production increased by about 20 percent in 2022, reaching 3.3 million MT; almost all of the increased production was attributed to Indonesia.

“The nickel market will remain in surplus over the medium term on the back of strong supply growth in Indonesia,” Manthey said.

For its part, Wood Mackenzie expects primary refined nickel supply to increase by over 11 percent in 2023 compared to 2022, rising to 3.482 million MT.

“That 11 percent growth could be conservative, given the amount of projects that intend to come on stream this year,” Gardner said. “However, the biggest challenge will be demand – can current offtake rates accommodate so much more material? We doubt that it can, and so the question will be which suppliers moderate their own growth/expansions in order to protect prices.”

Indonesia's role in the nickel space

Indonesia has been gaining attention from investors in the nickel space for some months, particularly when it comes to the role the country could play in the battery space. Reuters data shows that the country has signed more than a dozen deals worth over US$15 billion for battery materials and EV production.

“For the next 18 months or so, the headlines out of Indonesia will focus on the mining and processing of nickel semi-manufactured products of mixed hydroxide precipitate and matte, which will, for the most part, be exported to China for further processing into nickel sulfate or metal,” Gardner said.

But into the second half of 2024 and beyond, the analyst expects to see further investments in value-added sectors within Indonesia, taking that mixed hydroxide precipitate and matte into refined sulfate and then into precursors and cathode active materials.

“Most of the investments in such downstream activities … remain in the discussion phases, but Indonesia is in a hurry for all this investment, yet construction takes longer than one thinks,” Gardner said. “Indonesia also needs to work out if it wants to diversify its sources of investment to include other western partners.”

But one serious challenge that the expert sees for Indonesia is the global — excluding China — perception of how “green” it is to get nickel into batteries made entirely in Indonesia versus coming from recycled batteries in Europe or North America.

“There’s a lot of financial backing available to companies wanting to invest in the truly green battery space, but is Indonesia positioning itself to be sufficiently attractive to be a contender to receive it?” he said.

What's ahead for the nickel market in 2023?

Looking ahead, FocusEconomics analysts believe nickel prices should decline this year, but remain well above their 10 year average. Panelists at the firm see the metal averaging US$22,973 in Q4 of this year, and US$22,131 in the same quarter in 2024.

Meanwhile, ING expects nickel to gradually move higher over the course of 2023, averaging US$25,250 in for the year.

“However, price gains are likely to be capped by rising Indonesian production, keeping the market in a surplus this year,” Manthey said.

For its part, Wood Mackenzie is forecasting an average Q2 price of US$22,900.

“We really need to see Chinese and European stainless steel demand pick up,” Gardner said. “Everyone talks about batteries, but stainless steel still accounts for 65 to 70 percent of primary nickel demand.”

Another factor to keep in mind, according to the analyst, is high and rising interest rates, which make everyone cautious about buying or investing in industrial metals assets and products.

“And holding nickel and/or stainless steel products in inventory at high 'costs' at a time of such high interest rates and tepid demand is not for the faint hearted,” he said.

Don’t forget to follow us @INN_Resource for real-time news updates!

Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

Additional information on Australia stock investing — FREE

Nickel Price Update: Q2 2023 in Review

Nickel prices declined more than 30 percent in the first six months of the year, and uncertainty and volatility are expected to continue to affect the market for the base metal in the coming months.

Increasing supply from Indonesia and a slower-than-forecast demand rebound from China have hit the sector in recent months, even as the market continues to recover from last year’s London Metal Exchange (LME) meltdown.

What happened in the second quarter of this year in the nickel space? Read on to learn about the main trends in the nickel market in Q2, including supply and demand dynamics and what market participants are expecting for the rest of the year.

How did nickel prices perform in Q2?

Nickel prices kicked off the year trading at the US$30,000 per metric ton (MT) level, hitting their highest point of 2023 on January 3 at US$31,118. Since then, prices have plummeted to hover around US$20,000.

Nickel's price performance in H1 2023.

Chart via the London Metal Exchange .

Q2 started with nickel trading at US$23,838; it then rose to its highest point of the quarter on April 18 at US$25,633.

“The increase was likely driven by a surge in demand, as consumers believed prices had bottomed out — nickel prices declined by 21.4 percent from January to March — as well as a rise in demand for stainless steel,” analysts at FocusEconomics said in May.

But the base metal was unable to sustain that level, and fell throughout the three month period to touch its lowest point on June 28, when it was changing hands for US$20,056.

During Q2, Wood Mackenzie Principal Analyst Adrian Gardner said prices performed in line with his expectations.

The main factors impacting the nickel market in the second quarter were "the poor pickup in the Chinese economy and the increasing excess of nickel supply,” the analyst told the Investing News Network.

“I thought that the Chinese economy and domestic demand for nickel-related items, such as stainless steel, would fare better than they have. Right at the end of June, the Chinese government and its central bank acknowledged that its economy needed help, and so they reduced lending rates and introduced a significant subsidy program to boost production and sales of electric vehicles (EVs) over the next four years," he explained.

“Although the volumes have stabilized over the past few months, they are still at lower levels than before the nickel crisis last year,” ING’s Ewa Manthey said in a note . “We expect more near-term volatility to continue until the LME rebuilds trust in the benchmark nickel contract, volumes pick up again and the market’s confidence in it recovers.”

Nickel prices have declined almost 37 percent since the start of the year, ending the second quarter at US$20,516.

What is the nickel supply and demand forecast for 2023?

At the end of last year, analysts were expecting the nickel market to remain under pressure as a surplus in the industry built up. Most continue to agree that a surplus is on the horizon in 2023.

“In the past, market surpluses have been due to Class 1 nickel; however, in 2023, the surplus will be on account of Class 2 nickel,” Manthey said. Class 1 nickel is the type deliverable on the LME, while Class 2 includes nickel pig iron and ferronickel.

Production of stainless steel accounts for around 70 percent of nickel demand. However, Chinese demand during the first months of the year did not see as strong of a revival as analysts had expected.

“In light of the Chinese economic and EV sector-specific incentives just released, we are expecting a better H2 from both the stainless and battery segments,” Gardner said. Chinese demand is expected to be up by 8 percent for stainless steel and 18 percent for the battery segment in the second half compared to the first half of this year.

Looking further ahead, the nickel market will see a shift in demand segments in the coming decade, with the battery space growing its share. Fastmarkets is forecasting its share of demand will jump from 12 percent in 2022 to 41 percent in 2033.

“This is going to require substantial additional nickel units, and not the type of units that the industry has geared itself to produce in the recent past,” Olivier Masson of Fastmarkets said in a keynote presentation in June.

As a result of the increased need for supply, Indonesia has been gathering attention from investors in the nickel space for some months, in particular when it comes to the role the country could play in the battery space. Reuters data shows that the country has signed more than a dozen deals worth more than US$15 billion for battery materials and EV production.

“Chinese investors are expecting to see their new acid leaching and matte projects in Indonesia come on stream, with one at least going all the way through to nickel sulfate,” Gardner said. “So far, the ramp-up success has been good, but the question is — will it continue?”

Additionally, the analyst added, when it comes to Indonesia and China, the market needs to see the excess of nickel pig iron in both countries being absorbed by better performance in domestic stainless steel consumption in China.

Looking over to supply in 2023, Wood Mackenzie expects H2 refined supply to be only marginally above H1 at 1.77 million MT compared to 1.73 million MT. “But we have an eye to H1 2024’s growth to 1.91 million tonnes as new projects both ramp up from a Q4 2023 start or become commissioned during Q1 2024,” Gardner said.

When asked about the main challenges junior miners face today, Gardner said there is considerable appetite among majors, including conventional miners/refiners and automotive OEMs, for the “right” resource for battery raw materials.

“Junior miners/exploration companies need to hold their nerve and not accept the takeover/equity investment bid from the first offer that comes along,” he added.

What's ahead for nickel prices in 2023?

Nickel has been the worst-performing metal on the London Metal Exchange so far this year, according to ING.

“This underperformance is likely to continue as we head into the second half of 2023 with the market likely to test lower levels amid a weak macro picture and sustained market surplus,” Manthey said.

ING sees prices averaging US$21,000 in the third quarter and US$20,000 in the fourth quarter.

“Prices should, however, remain at elevated levels compared to the average prices pre the historic LME nickel short squeeze due to nickel’s role in global energy transition, and the metal’s appeal to investors as a key green metal will support higher prices in the longer term,” Manthey added.

In terms of prices, Wood Mackenzie expects nickel to hold steady at between US$22,000 to US$22,500. Given the oversupply outlook forecast by the firm, prices are unlikely to rise again for the next few years.

For FocusEconomics panelists, nickel prices are seen rising above the levels seen at the end of June by the close of the year, supported by surging demand from the EV sector.

“However, excess supply from Indonesia and China should keep the market in surplus,” they said in their latest report.

FocusEconomics panelists see nickel prices averaging US$21,156 in Q4 2023 and US$20,738 in Q4 2024.

Don’t forget to follow us @INN_Resource for real-time news updates!

Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

Additional information on Australia stock investing — FREE

Top 5 ASX Nickel Stocks of 2023

With its diverse applications in both technology and industry, nickel is a metal that will never go out of style.

Nickel is commonly used in alloys to create stainless steel, but more recently has found a modern use: batteries. With the rising trend toward electric vehicles, the base metal is in high demand for its role in the production of lithium-ion batteries.

Nickel prices have encountered much volatility in the past few years. They spiked abruptly to surpass the US$100,000 per tonne point in March 2022, prompting the suspension of trading on the London Metal Exchange. However, nickel trading soon resumed, and prices fell back to a normal range over the following months, nearing the US$20,000 mark by July of last year.

China ending its zero-COVID policy gave the base metal a boost to the US$30,000 level as 2023 came into frame. However, global economic uncertainties have placed downward pressure on demand, sending nickel to the US$20,000 mark in Q2 .

Against that backdrop, the Investing News Network has listed the top nickel stocks on the ASX by year-to-date gains. Data for this list was gathered using TradingView's stock screener on July 17, 2023, and all companies had market caps above AU$10 million at that time. Read on to learn more about the top ASX nickel stocks.

1. Ragnar Metals

Year-to-date gain: 84.62 percent; market cap: AU$11.37 million; current share price: AU$0.024

Ragnar Metals (ASX: RAG ) is building a portfolio of prospective nickel, copper and gold assets across Sweden. Its main focus is its Granmuren nickel prospect, a greenfield discovery that also includes copper and cobalt in “Voisey's Bay style mineralization."

In February, Ragnar announced the identification of three new targets via downhole induced polarisation and resistivity surveys, as well as downhole transient electromagnetic surveys. “We are very excited about the new target areas defined by these new cutting-edge downhole geophysics technologies that provide evidence the Granmuren nickel-copper-cobalt system continues to expand in several directions at depth,” Ragnar Metals Executive Director Eddie King said.

2. Leeuwin Metals

Year-to-date gain: 71.74 percent; market cap: AU$17.47 million; current share price: AU$0.395

A relatively new addition to the ASX , Leeuwin Metals (ASX: LM1 ) is targeting critical metals that are necessary for the electric vehicle and renewable energy markets, such as nickel, copper and lithium. Its assets include five projects across Canada and Western Australia. Leeuwin’s flagship project is the William Lake nickel sulphide project, located in Manitoba’s Thompson nickel belt.

This year's 5,000 metre maiden drill program at William Lake is targeting high-grade nickel sulphide mineralisation that was previously identified over more than 2 kilometres of strike at the W56 prospect. In July, Leeuwin reported multiple significant nickel sulphide hits , including a 1.4 metre massive to semi-massive sulphide zone with spot readings of 5 percent nickel within a 24 metre zone of disseminated nickeliferous sulphides from 227.2 metres.

3. Nordic Nickel

Year-to-date gain: 28.21 percent; market cap: AU$14.62 million; current share price: AU$0.25

Nordic Nickel (ASX:NNL) is working to become a major supplier of sustainably sourced battery-grade nickel.

The company has a portfolio of prospective projects in Finland’s Central Lapland greenstone belt , including its wholly owned flagship Pulju project, which has a JORC-compliant resource estimate of 133.6 million tonnes, including 278,520 tonnes of nickel and 12,650 tonnes of cobalt. In May, Nordic Nickel published assays from recent drill work confirming an extensive nickel sulphide system at Pulju.

4. Adavale Resources

Y ear-to-date gain: 16.67 percent; market cap: AU$10.98 million; current share price: AU$0.021`

Adavale Resources (ASX: ADD ) is an explorer and developer that owns 100 percent of the Kabanga Jirani nickel project, as well as two farm-in licences (Luhuma) in Tanzania's East African Nickel Belt. The company claims that its nickel project portfolio is "adjacent and along strike from the world’s largest undeveloped high-grade Kabanga nickel sulphide deposit."

Adavale recently confirmed massive nickel sulphides as part of a campaign currently underway at the Luhuma Central prospect. “These results are extremely encouraging as we continue to drill and seek to unlock the strike potential of this mineralisation, based on our extensive AMT, soil and EM datasets covering this area," said Adavale Executive Director David Riekie.

5. Lunnon Metals

Y ear-to-date gain: 3.91 percent; market cap: AU$189.58 million; current share price: AU$0.93

Exploration company Lunnon Metals (ASX: LM8 ) owns what it describes as a prospective nickel-gold project in Western Australia's Kambalda nickel district, which has produced more than 1.6 million tonnes of nickel since its discovery in 1966.

Lunnon completed a preliminary feasibility study for its Baker project in May, including an initial probable ore reserve for the deposit of 612,000 tonnes at 2.86 percent nickel for 17,500 contained nickel tonnes.

Don’t forget to follow us @INN_Australia for real-time updates!

Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: Nordic Nickel is a client of the Investing News Network. This article is not paid-for content.

Additional information on Australia stock investing — FREE