Nickel Prices Halved in One Year Amid Indonesia's Large-Scale Supply Offensive

This year, nickel prices have continued to fall repeatedly, reaching their lowest level in three years. This is due to Indonesia, the world's largest nickel producer, continuing a large-scale supply offensive to strengthen its control over the supply chain. Australian producers, competitors in nickel production, are facing a downturn.

According to the London Metal Exchange (LME) on the 22nd (local time), nickel futures closed at $16,052 per ton on the 20th, reaching the lowest price since January 3, 2021 ($16,068). Compared to the peak price on January 1 last year ($30,344), it is nearly half.

Nickel has a characteristic of being resistant to rust due to the oxide layer formed on its surface, making it widely used in various metal industries. Stainless steel is a representative example. Nickel is also essential in electric vehicle batteries, which are dominated by major advanced countries, making securing an advantage increasingly important.

The continued decline in nickel prices is largely influenced by Indonesia, the world's top nickel producer. Indonesia has been continuously increasing production to strengthen its global supply dominance. Indonesian nickel accounts for 50% of the world's supply. On the other hand, demand has sharply increased but has not kept pace with the global nickel supply, according to analysis.

Producers outside Indonesia, which are facing losses due to the nickel price plunge, are downsizing. The country hit hardest is Australia, which ranks first in nickel reserves. On this day, Wailu Metals announced that it would suspend production operations at its Cambalda nickel site in Australia from the end of May due to the nickel price decline. Earlier, First Quantum Minerals also suspended its Ravenshoe nickel production facility in Western Australia and cut one-third of its workforce. The industry expects that BHP Group, Australia's largest mining company, may have to write off $1.2 billion invested in the West Musgrave project.

There are also forecasts that nickel prices could fall further in the near term. Nikhil Shah, senior analyst for non-ferrous metals at CRU Group, a commodity market analysis firm, said, “There is still a lot of supply coming from Indonesia, and to curb Indonesia's supply increase, nickel prices will inevitably have to be lowered.”

According to global investment bank Citigroup, nickel prices could fall to $15,500 per ton within the next three months. Citigroup has revised its average nickel price forecast for the first quarter downward from $18,000 to $16,000 per ton.

The medium- to long-term direction of nickel prices is considered to depend on the Indonesian presidential election. At the presidential candidate TV debate held on the 21st, vice-presidential candidate Muhaimin Iskandar, running with presidential candidate Anies Baswedan, raised concerns about environmental destruction caused by indiscriminate increases in nickel production. Additionally, within Indonesia, safety issues in nickel production have been raised following an explosion at a nickel refinery in December last year that killed 21 people. These policy and public opinion changes have led to speculation that nickel production may decrease in the future.

This content was produced with the assistance of AI translation services.