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Fitch Solutions Sees Nickel Prices at USD 15000 in 2020

Metal News - Published on Wed, 27 Nov 2019

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Fitch Solutions Macro Research said that nickel prices are expected to gradually increase between 2020 and 2022 due to tight supply as a result of the export ban imposed by Indonesia, the mineral’s top producer and the growing demand from the automotive industry. Fitch said “While prices could still head lower in the coming weeks, we believe that they will rebound from spot levels as we move into 2020 and remain elevated throughout next year, buoyed by a tight fundamental picture. In 2020, it projects average nickel prices of USD 15,000 per tonne, upgrading a previous estimate of USD 14,500. This is expected to increase to USD 15,500 in 2021 and 2022, then easing to USD 15,250 in 2023.”

Fitch Solutions noted that the increase in price will be influenced by Indonesia’s nickel export ban starting January. It said “In the longer term, we believe that prices will continue heading higher up until 2022 as the market will remain in deficit or balanced. The ban could also limit refining activity in China next year. Chinese refining output is now expected to grow an average of 2.5% year-on-year, down from 3% projected for 2019. However, supply concerns due to the ban have started to dissolve due to a realization that the Philippines could fill part of the gap as suspended mines resume their operations.”

Fitch Solutions added that nickel prices will also be influenced by demand from the automotive industry, a major user of stainless steel, which is the main application for nickel. Automotive demand will come into greater prominence amid an expected slowdown in the Chinese construction industry. Fitch Solutions said “Vehicle production will continue to record positive average annual growth of 1.0% over 2020-2028, lending some support to nickel demand. Other major nickel-consuming markets such as South Korea and India will also provide an upside to demand due to strong average vehicle production growth of 9.1% and 11.4%, respectively, over the next 10 years.”

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Posted By : Rabi Wangkhem on Wed, 27 Nov 2019
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