Rise in Q3 Asian nickel prices likely to be capped on supply surplus

Asian nickel prices are likely to see limited upside in the third quarter on weak market fundamentals due to thin downstream demand for nickel-manganese-cobalt batteries and stainless steel amid rising primary nickel output.

"We expect weak global primary nickel market fundamentals -- emphasized by our forecasts for total primary nickel stocks [in terms of weeks of consumption] to reach a four-year high in 2024," said Jason Sappor, metals and mining research senior analyst at S&P Global Commodity Insights.

Despite recent supply disruptions following delayed Indonesian nickel mining license approvals and mine shutdowns amid social unrests in New Caledonia, the world's third largest nickel-producing country, primary nickel is expected to remain in an oversupply of 98,000 mt in 2024, Commodity Insights data showed.

To deal with supply disruptions, Indonesia and China -- forecast to make up 72% or 2.63 million mt of global primary nickel production -- were seen increasing Philippines nickel ore imports in the second quarter. Indonesia saw a 24% month-on-month jump in imports to 280,000 mt in April, according to BPS-Statistic Indonesia, and China imported 4.61 million mt, rising 28% month on month in May, China customs data showed.