3 May 2022 – The International Nickel Study Group (INSG), which consists mainly of consumer countries, announced in April 2022 that it assumed a nickel production surplus for 2022. The INSG had already significantly overestimated the situation in 2021. This could now be the case again in 2022. And Turkey achieves a partial success at the WTO with regard to the EU Safeguard measure against certain steel products.
Nickel production surplus unlikely in 2022?
Having overestimated by a shortfall of about 276,000 tonnes of nickel production in April 2021, the International Nickel Study Group (INSG) has now forecast a surplus of about 67,000 tonnes for 2022. Is this a realistic calculation?
Production: 21 million electric vehicles from 2025
In 2021 alone, about 4.2 million Electric Vehicles (EV) were sold. Depending on the basis of calculation, between 160,000 and 210,000 tonnes of nickel were consumed here just for the batteries. And that was just the beginning. For 2022, 6.4 million EVs are predicted to be sold. By 2025, 21 million EVs are expected to be sold annually.
With the current increase in battery size to extend the range, this will also have a significant impact on nickel consumption. Thus, in 2025, more than 1 million tonnes of nickel could be needed just for EVs.
EV batteries with up to 90% nickel content
Alternative EV batteries, which are often used to supposedly reduce nickel consumption, have an energy density that is up to 25% lower and thus a shorter range, and are much more susceptible to cold. Many battery manufacturers have therefore already started to increase the amount of nickel in their batteries up to 90%.
Russian nickel production off the market
In April 2022, Russia issued a decree banning the sale of nickel on foreign commodity exchanges. Furthermore, nickel may only be traded in roubles. Yesterday, the European Commission has now determined that the payment transactions with Russia in the dollar/euro-ruble exchange violate Western sanctions due to the Ukraine crisis.
This means that Russian nickel is likely to disappear from EV batteries for Western countries for the time being. So about 290,000 tonnes of Russian nickel production have been taken out of the equation. Possibly for years to come.
Based on INSG figures, the shortfall for 2022 would thus already be at least 200,000 tonnes.
Producers already unable to keep up
The Russian nickel producer Norilsk Nickel has hardly been able to increase its production in 2022 so far (and could now be as good as out of the market). Glencore has also fallen short of its nickel production targets in recent years. Things look only slightly better for the other mining groups. Demand is rising rapidly worldwide and the available quantities are shrinking rapidly.
Shortfall in nickel production?
It is difficult to speak of overproduction in the coming years, and only with reservations. The International Energy Agency (IEA) has already been heavily criticised for totally underestimating the green transformation. The INSG, which is largely made up of Western nickel consumers and thus has a huge interest in cheap nickel, seems to have completely underestimated the green transformation in its calculations, but also the effects of the Western sanctions on INSG member Russia.
The increases in demand in the energy sector, in household electronics, in entertainment and work equipment and in stainless steel production seem to be rather neglected by institutes, associations and groups.
And the approx. 170,000 tonne shortfall in nickel production in 2021 still has to be compensated for.
Safeguard: Turkey wins partial victory against EU before WTO
Turkey won a partial victory at the World Trade Organisation (WTO) with its complaint regarding the EU Safeguard measure against certain steel products. This should result in a minor, but probably not entirely inappropriate, upward quota adjustment for Turkish steel exports for the European Commission (EC).
In addition, the WTO has recommended that the EC improve its safeguard justification. Overall, however, the WTO has found that the EU Safeguard measure is in conformity with the GATT Agreement.
The EC has announced that it will make improvements if the WTO issues a ruling on the matter within the next 60 days.
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