FeNi supply to tighten against nickel oversupply by 2025
创建于02.26
On February 18, 2025, Minmetals Resources Limited (MMG) announced an agreement to acquire 100% of Brazil Nickel from Anglo American plc (AAL.L) for a consideration of up to $500 million. The deal includes two ferronickel projects (Barro Alto and Codemin) and two greenfield projects (Jacaré and MSB) in Brazil. This move has garnered widespread market attention, and the acquisition reflects structural changes in the global nickel market.
In recent years, global ferronickel (FeNi) production has declined annually. In 2024, production cuts in regions such as New Caledonia, Myanmar, and the Dominican Republic due to social factors led to the near disappearance of high-grade FeNi in the Chinese market.
Currently, the primary supply in the Chinese market comes from South32, AAL.L, and ANTAM. The supply shortages have pushed up FeNi prices in 2024 and limited growth in European stainless steel production. In the second half of the year, the situation eased as Vale S.A. (VALE) resumed production and European stainless steel producers imported Nickel Pig Iron (NPI) from Indonesia.
Source: Badan Pusat Statistik
Structurally, the global nickel market saw a significant surplus of NPI in 2023, but this surplus narrowed considerably in 2024, shifting toward a tight balance, while the surplus of pure nickel expanded. The shift was primarily driven by an increase in China's 300-series stainless steel production and the slow progress of the RKAB approval in Indonesia.
For 2025, NPI is expected to shift from a tight balance to a slight surplus due to the slower ramp-up of stainless steel production capacity. Nevertheless, due to Indonesia's policy restrictions on NPI production, policy disruptions may provide bottom support for prices by affecting production costs.
The refined nickel market remains in surplus, with inventories continuing to accumulate. As industry profits shrink, the exit of high-cost capacity becomes inevitable. The reduction in Australian refined nickel production by the end of 2024 marks the beginning of the squeeze effect from Indonesia and China's low-cost capacities.
For nickel sulfate, the market is expected to remain slightly oversupplied or balanced. Weak demand and a high proportion of in-house consumption limit the potential for profit recovery. As a result, nickel sulfate production is likely to shift towards sales-based or even see capacity phase-out.
Additionally, global FeNi production is expected to decline and keep supply at low levels by 2025, which may provide some price support. However, due to the supply pressure from NPI and refined nickel, upward price potential could be constrained.
In the short term, the price fluctuations of nickel are expected to narrow, with strong support from mining prices. Market players still need to monitor the impact of the Indonesian rainy season on supply and changes in Indonesian policies.