Column: Electric dreams turn into a nightmare for battery metals
A sector that was once racing to build new supply has been closing mines and deferring projects as low prices bite into the cost curve.
Russian mining and metals giant Nornickel has raised its global nickel surplus estimate for the current year due to lower than expected consumption in the battery sector, the company said in a market report.
Nornickel, the world’s largest producer of palladium and high-grade nickel, expects a global nickel surplus of more than 250,000 metric tons this year, up from previous estimates of 200,000 tons.
“Due to the continuing destocking cycle in the EV supply chain, a greater share of non-nickel LFP batteries, and a partial shift from BEV to PHEV sales in China, even though EV deliveries are still hitting new record highs. Meanwhile, the launch of new Indonesian nickel capacities continued at a high pace,” the report said.
Due to the oversupply of low-grade nickel, the market will continue to have a surplus of more than 190,000 metric tons in 2024, the producer expects.
Nornickel, whose share in palladium production exceeds 40%, also revised its market forecasts for that metal for the current year, expecting a global deficit of 0.9 million ounces compared with previous estimates of 0.2 million ounces.
The deeper deficit is expected due to a revision of the secondary production forecast from a 9% rise to a 15% decline.
“… slightly lower than expected primary production from North America will be offset by weaker electronics demand,” the company said.
“The 2023 production/consumption deficit was generally covered by the release of stocks by demand-side market participants,” it added.
In 2024, according to the forecast, the deficit in the palladium market will be reduced to 0.4 million ounces on the back of a recovery in secondary production.
(By Anastasia Lyrchikova; Editing by Gareth Jones)
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