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Nickel futures continued to face downward pressure, sliding below the $16,500 per tonne mark, a level not far from three-year lows. The persistent weakness in nickel prices can be attributed to several key factors impacting the market:

• Robust Supply: The world’s leading nickel producers, including Indonesia, the Philippines, and China, have maintained robust supply levels. This influx of supply has exerted sustained pressure on nickel prices, preventing a significant price rebound.
• Supply-Demand Imbalance: According to the latest forecasts from the International Nickel Study Group, the global nickel market witnessed a substantial supply surplus of 223,000 metric tons in 2023. This surplus is projected to expand further, reaching 239,000 metric tons in 2024. The surplus stems from subdued demand, primarily due to the global economic slowdown, with a particularly fragile recovery in China, a major consumer of nickel.
• Potential Relief Factors: While nickel has faced headwinds, there are potential relief factors on the horizon. Market sentiment has been buoyed by expectations of rate cuts by major central banks, a move that could provide some support to commodity prices. Additionally, there is optimism regarding stronger demand prospects, with a forecast of 3.47 million tons of nickel demand in 2024, compared to 3.20 million tons in 2023. This uptick is linked to the growing usage of nickel in electric vehicle batteries and the resurgence of the stainless-steel sector.
• Challenging Year in 2023: It’s important to note that 2023 proved to be a challenging year for nickel, with prices plunging by a staggering 45%. This decline positioned nickel as the worst performer among nonferrous metals on the London Metal Exchange (LME).

In summary, the nickel market continues to grapple with oversupply and subdued demand, factors that have contributed to its prolonged slump in prices. However, there are glimmers of hope on the horizon, with expectations of central bank actions and the potential for increased demand driven by emerging industries.

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