Nickel prices are expected to reach new record highs by 2027, according to data released by Fitch Solutions. Throughout 2023-2027, Fitch Solutions expects a steady uptrend in nickel prices, which will then likely peak by the end of this period.
In the short-term, nickel prices are set to weaken during the first half of 2022, as acute market tightness developed throughout October and November 2021 continues to ease. Prices have already fallen from the multi-year highs reached during October and Fitch expects this consolidation to persist over the coming months.
This decline in nickel prices over the first half of 2022 means that prices should average lower over the year to USD17,000/tonne ($AUD23,727/tonne) compared to USD18,400/tonne ($AUD25,676/tonne) in 2021. On the supply side, production of refined nickel should improve during the first half of 2022 in major nickel exports including Indonesia and the Philippines.
Stronger production growth will also likely be supported by technical advances in converting lower-grade Class 2 nickel ore that is abundant in Indonesia into higher-grade Class 1 nickel that can be used in the battery industry. This will help to alleviate a bottleneck in nickel supply to the battery industry that is likely to develop over 2022-2026 as the global production of batteries for the electric vehicle industry surges.
In the long term, a shortage of Class 1, battery-grade nickel may encourage automakers to explore lithium-iron-phosphate (LFP) batteries for mass-market vehicles, presenting downside risk to nickel demand for lithium-ion batteries.
In February 2021, Tesla chief executive officer Elon Musk said that nickel remains the firm’s biggest obstacle to successfully scaling lithium-ion cell production and has prompted Tesla to shift its standard range vehicles to contain LFP cathodes. The firm also reached an agreement in March 2021 to source raw materials from the Goro nickel mine in New Caledonia for its batteries by serving as a technical and industrial partner.
This signifies the continuing preference for nickel-heavy batteries due to higher energy density properties.
CREDIT – Australian Mining