Theme of the Day: Copper & Nickel in Surplus – Norilsk Nickel

Nickel: Norilsk Nickel revises its forecasts for refined nickel production in 2024 and 2025 slightly downwards, it says. Sees +3% YoY growth in 2024 to 3.54Mt, and +5% YoY growth in 2025 to 3.71Mt.Nickel use in the battery sector is forecast to grow by just 4% YoY in 2024 to 486,000t on the back of the slowdown in NEV (new energy vehicles) sales and rising LFP (lithium-iron-phosphate) share in batteries. In 2025, nickel use in batteries is expected to grow moderately by 9% YoY to 528,000t, driven by the likely recovery of BEV (battery electric vehicles) sales with nickel-based chemistries, especially in Europe and the US.Sees nickel in a 150,000t surplus in 2024, mainly concentrated in the high-grade nickel sector (~130,000ts) for the first time ever. Expects similar surplus in 2025. Indonesian nickel supply risks are unappreciated. Notes depletion of high-grade resources, continuous decline in NPI grades, worsening chemical composition of nickel ores amid rising impurities such as silicon & magnesium, worsening climatic & ESG conditions. Around 40% of nickel producers are loss-making at current prices. Comes as growing Indonesian supply weighs on high-cost operations globally, predominantly in Australia and New Caledonia, which could be a potential upside for price. Given the scale of potential supply cuts in Indonesia & elsewhere, plus robust nickel use in stainless steel & other melting applications, including nickel-containing alloys & special steel, the market could be intrinsically more balanced than anticipated.Sees NPI-to-matte conversion +12% in 2024 to 257,000t & +47% in 2025 to 378,000t. With rising production of MHP, the need to convert NPI into matte for batteries will continue to ease, with matte mostly purposed for nickel metal output. However, if the nickel ore shortage persists in 2025 along with the rising demand from China's stainless steel sector, it is highly likely that the conversion of NPI into matte will be the first to face reductions.Copper: Sees mined copper output +1% in 2024 at 227Mt, +2% in 2025 to 23.2Mt, & +4% in 2026 to 24.1Mt. Russia's Ak-Sug copper mine is expected to begin operations by 2027 at the earliest, reaching full capacity of 500,000t of copper-molybdenum concentrate. Sees refined copper +3% in 2024 at 26.7Mt, rising to 27.1Mt in 2025 & 27.9Mt in 2026.It expects expect global refined copper usage to grow 3% YoY to 26.4Mt in 2024. This upward trend is likely to continue into 2025 and 2026, reaching 27.1Mt and 27.9Mt, respectively; consistent annual growth of 3%.