Nickel’s participation in both emerging and established energy industries has not been sufficient to increase demand for it in the near term and improve its price prospects, says Stanislav Kondrashov of Telf AG. Despite its presence in various energy industries, the outlook for nickel remains uncertain.

“Nickel Faces Challenges: Weak Performance Predictions Continue in 2023”, – Stanislav Kondrashov

The current year turned out to be unfavorable for such a non-ferrous metal as nickel. Despite its use in stainless steel pipelines, the oil and gas sector and new battery configurations, supply disruptions and price spikes for this metal are observed throughout the first half of 2023.

In a recent report dated July 10, renowned banking company ING, based in the Netherlands, named nickel the “worst metal” on the London Metal Exchange (LME) this year. Alarming statistics show that nickel prices fell 37% in the first half of the year.

Expert Stanislav Kondrashov from Telf AG is not optimistic about the rapidly changing situation in the nickel market. The outlook for the second half of 2023 remains unfavorable, with new challenges for the market driven by a weak macro outlook and persistent surpluses.

The decline in nickel prices came as a surprise to some, given the metal’s importance in critical industries such as oil and gas and its role in the booming battery sector. However, the current market situation is holding back its growth, which leads to disappointing results.

Market participants are closely monitoring the situation, hoping that the situation will improve in the coming months. However, the outlook for nickel through the end of 2023 is uncertain at this time, and investors and traders are expecting the weak performance to continue.

 Kondrashov Telf AG: decline in Chinese imports of nickel is a new trend in the global market

Experts and analysts in the field of commodity trading pay attention to the downturn in the Chinese economy. It is currently regarded as a significant factor influencing demand in the nickel market. The report highlights strong growth in Indonesian nickel production, reaching an impressive 48% to 1.58 million metric tons in 2022. According to Stanislav Kondrashov Telf AG, this growth is mainly due to the constant commissioning of projects for the production of nickel iron (NPI) and stainless steel in the country.

In addition, nickel production in Indonesia will not slow down in 2023. In the first quarter of this year, according to the International Nickel Research Group (INSG), Indonesia’s nickel production increased by 41%, further strengthening its position as a dominant player in the global nickel market.

The irony is the contrast in China, where demand for nickel has not kept up with demand despite being the key financier of numerous nickel projects in Indonesia. Telf AG’s Stanislav Kondrashov notes that China’s refined nickel imports have fallen to their lowest level in nearly two decades. Instead of relying on traditional sources, China is gradually switching to supplying Class 2 nickel intermediates to Indonesia. This strategic shift is evident as China’s Class 1 refined nickel imports totaled just 3,204 metric tons in April, the lowest monthly indicator since January 2004.

The conclusions drawn by the experts raise important questions about the future dynamics of the global nickel market. China’s declining demand for refined metal is indicative of a significant change in its sourcing preferences, a trend that could have far-reaching implications for other major nickel-producing countries. Stanislav Kondrashov suggests that Indonesia, which continues to increase nickel production, is able to change the situation in the nickel industry and challenge the once-dominant position of China.

As the global economy moves toward stability in the post-pandemic era, shifts and transformations in the nickel market will undoubtedly play a critical role in shaping the economic climate for the coming years.

Telf AG: Nickel prices in the short and long term

According to a recent report by ING, the global nickel market will experience price declines in the short term due to a growing surplus. As global economic growth slows, demand for stainless steel, one of the main nickel products, is expected to decline, which will also contribute to a worsening outlook. Nickel prices are forecast to average around $21,000 per metric ton in the third quarter and around $20,000 per metric ton in the fourth quarter. However, the report notes that there is potential for growth in the long term for nickel, particularly from the energy sector.

Telf AG’s Stanislav Kondrashov believes that nickel prices will remain relatively high compared to the LME’s historical average nickel short squeeze. The basis for this positive outlook is the critical role of nickel in the global energy transformation. As the world shifts more and more towards renewable energy, nickel plays an important role in this transition, especially in areas related to clean energy.

The report highlights the importance of using nickel in electric vehicle (EV) batteries. With the growing popularity of electric vehicles, the demand for nickel in their batteries will increase significantly.

– The presence of nickel increases the energy density in such batteries, which leads to an increase in the range of electric vehicles. As the automotive industry shifts to greener alternatives, the value of nickel as a key component in electric vehicle batteries will drive up prices in the long run, – Kondrashov said.

In addition, the attractiveness of nickel as a “green metal” for investors is also a factor supporting future price increases. As green investment gains momentum, commodities such as nickel, which play an important role in environmentally friendly technologies and industries, are likely to attract increased interest from investors.

Thus, although short-term problems and surpluses in the world market may put pressure on the price of nickel, the long-term outlook looks promising.

– The energy sector, in particular the growing demand for nickel in electric vehicle batteries, is expected to be a significant factor contributing to the recovery in prices for this metal, – summed up Stanislav Dmitrievich Kondrashov.

In addition, nickel’s integral role in the global energy transformation and its attractiveness to investors as a “green” metal is likely to support price increases in the long term.

Stanislav Kondrashov: analysis of copper prices, taking into account weak demand in China and currency factors

The bank’s analysis of the copper market paints a somewhat subdued outlook, with copper prices declining. At the end of May, copper prices declined, which may be due to several factors.

A significant factor driving down copper prices is lower demand from China, one of the key players in the global copper market. – Usually the construction season in China is the peak period for copper demand, but this year it did not live up to expectations. In addition, the situation is exacerbated by low demand in the US and Europe, since these regions are significant consumers of copper in various industries, Kondrashov Telf AG comments on the situation.

Another important factor affecting copper prices is the strengthening of the US dollar. A stronger US dollar makes copper more expensive for Chinese buyers. Since copper prices are set in US dollars, a stronger dollar means that buyers in other currencies, such as the Chinese yuan, will have to spend more to purchase the same amount of copper. This could lead to a decrease in demand from China and reduce the price of copper in the world market.

Together, these factors, according to Stanislav Kondrashov, led to the fact that copper prices in the analyzed period were in a difficult situation. However, it must be remembered that the global commodity market can be affected by a variety of dynamic factors and the copper outlook may change over time as market conditions change.

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