Nickel prices are projected to average at $15,750-16,500/mt in 2021, said Fitch, according to media reports, adding that in the coming months, LME nickel prices will trade lower than the present spot levels as demand from steel production steadies and nickel metal production increases.
Increasing demand from the stainless steel sector coupled with the current market deficit is likely to support prices up to 2025, notes Fitch and projects a gradual growth in prices over the years. In 2020, nickel prices averaged at $13,860/mt.
China’s demand for nickel for stainless steel is set to increase with domestic nickel-based stainless steel production witnessing a 23.5pc growth in the March quarter compared to last year. A slowdown is, however, looming for the short term, warns Fitch.
Nickel prices will continue to increase gradually over the next decade with China’s growing construction sector and the global market likely witness a nickel deficit. Demand for electric vehicles is also projected to increase in the long term, globally, pushing demand for nickel higher.
For 2021 year-to-date, Fitch has calculated average nickel prices to be around $17,300/mt which is an upgrade from their previous projection. Prices were revised upwards despite the price dips and the effects of Chinese regulators warning domestic commodities firms to maintain fair base metals values after prices rallied to break historical highs.
Nickel prices have recovered from the steep fall witnessed in March followed by the announcement of Chinese stainless steel producer Tsingshan. Fitch believes, as the year progresses, prices will gradually fall.
Indonesia’s nickel production is set to rise 33pc in 2021 from the prior year while Eramet plans of ramping up production of contained nickel, notes Fitch.