13 September 2023 – Indonesia wants to monitor nickel supply more closely and ensure that dwindling raw material reserves contribute to maximum value creation. Consumer sentiment in China has improved markedly and in the United States the bottom seems to have been reached in the destocking cycle.
Indonesia Government to monitor nickel demand
The Indonesian government has recently assured that it will monitor the fulfilment of nickel demand. In particular, the supply of high-grade nickel raw materials, which are necessary for the production of batteries, should be ensured in this way.
Nickel reserves in Indonesia are dwindling faster and faster
At the same time, Indonesian media point out that nickel reserves could be exhausted in about 10 years due to high domestic demand and ever new smelting capacities. And the exploration of new deposits would not progress. The amount of nickel imported into Indonesia has already more than doubled compared to the previous year.
EU’s nickel demand to increase tenfold by 2030
And the EU is also currently discussing the supply of critical raw materials, which unsurprisingly includes nickel and for which the EU currently assumes that demand could increase more than 10fold by 2030 (compared to 2020) and even more than 17fold by 2050. But it is no secret that the European Union likes to underestimate itself in such calculations. The example of hydrogen is a good illustration of this, where the necessary production capacities had to be doubled and yet the expansion has not even really begun.
We are therefore very curious about the medium-term developments in nickel prices.
Consumer sentiment in China improves
China’s auto sales picked up in August after a slow July. Dealership sales rose 2% year-over-year to 1.9 million vehicles. Wholesale sales increased 6% to 2.23 million units. Electric vehicle sales continue to grow faster than the overall market. Retail electric vehicle sales jumped 32% to 698,000 units, while wholesale sales rose 28% to 805,000 units. Government measures aimed at boosting consumer sentiment could continue driving growth momentum. The consumer cyclical goods sector could benefit from rising consumption. Analysts have already raised earnings forecasts for the sector by 5.2% for this year, a trend that may continue.
US destocking cycle bottoms out
Analysts at Deutsche Bank believe that the inventory liquidation cycle in the United States has bottomed out and that this should now lead to increased demand, especially for goods from Asia. Even though the US economy has grown robustly this year, this has so far been primarily supported by the service sector. Industrial production therefore still has some catching up to do and the coming US demand will support the Asian markets.
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