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"Indonesia considers cutting production of 122 million tons of nickel ore"! Market Player: That's crazy
Jinrui futures analyst Dai Zizhao believes that if the "above plan" is fully implemented, the nickel mine will reduce production by 800,000 to 1.2 million tons of nickel metal, the production reduction is too "outrageous", the feasibility of implementation is not big, so the market digested the news did not have a significant reaction. However, he said that the subsequent Indonesian nickel ore production quota may decline, and it is necessary to pay attention to the policy trend of the Indonesian government.
In fact, the Indonesian Ministry of Energy and Mineral Resources has repeatedly released news this year that it will restrict the production of nickel products in order to increase prices, protect domestic industry stability and export revenue, and also intentionally slow down the approval process of RKAB, leading to several nickel price rebounds during the year.
Nickel prices have been weak overall this year
The overall level of Lun nickel prices this year is low, showing an inverted "V" trend, and the opening price at the beginning of the year and the closing price on December 21 are only 1350 US dollars/ton.
In Yuan Zheng's view, the market fluctuations of Lun Nickel this year are mainly affected by macro factors, such as the weakening of macro pressure in the second quarter of this year, the collective rise of non-ferrous metal plates. Back to the nickel industry chain, the current force suppressing nickel prices from the fundamentals of oversupply, the new energy end of the year demand growth slowdown led to excess wet process industry chain, electrodeposition nickel industry chain profit growth led to a substantial expansion of production capacity, and downstream is also facing greater pressure to warehouse, oversupply fundamentals make nickel prices difficult to get out of the trough.
Gu Jing also believes that nickel prices throughout the year show a reverse "V" trend, and long-term performance is weak, the main reason is oversupply. During the year, the domestic electrodeposition nickel production capacity continues to be released, and the total output will exceed 330,000 tons, an increase of 36.8%. At the same time, domestic production enterprises such as Zhongwei and Huayou applied for delivery brands in the LME, and the export profit window began to open in April, and a large number of inventories entered the LME market for delivery, accumulating nearly 100,000 tons of inventory, and domestic inventories also increased exponentially. In addition, the growth rate of demand for nickel in the traditional industry chain and the new energy industry has slowed down significantly, resulting in a limited boost to nickel prices of ferric nickel and nickel sulfate. During the year, the supply of primary nickel was obviously oversupply, which formed a continuous pressure on nickel prices.
Mr Dai said the main reason for the weakness in nickel prices this year was oversupply and slow production clearance. In 2024, the supply of primary nickel is still excess, and the expansion of electrodeposition nickel production further expands the excess supply of pure nickel.
"It is worth noting that in the past two years, overseas and domestic high-cost production capacity is basically cleared, nickel prices have touched the marginal cost line of Indonesian production capacity, the part of the huge production capacity, the cost curve is relatively flat, and the first half of the macro drive has given some electrodeposit nickel projects considerable profits, interrupting the capacity clearance process that should have continued, making the part of the marginal production clearance is very slow," There have been no large-scale production cuts or shutdowns. As long as macro sentiment cools, nickel prices will continue to fluctuate around the cost line." 'he said.
The nickel market is expected to break the deadlock next year
In Gu Jing's view, in recent years, the nickel city has experienced a development process of "secondary nickel oversupply - overall oversupply - primary nickel oversupply obvious - secondary nickel oversupply narrowing". Although the share of domestic ferro nickel supply has been suppressed to a low level by the Indonesian NPI, if the Indonesian supply declines, the domestic ferro nickel bargaining power will rise.
"Considering that the Indonesian resource end prices are strong, or gradually raise the cost of the industrial chain, the reasonable valuation of nickel prices is also slowly rising." Therefore, we are relatively optimistic about nickel price performance in 2025, and next year is expected to break the current impasse of low prices and losses in the industrial chain, so that the industrial chain will develop in a healthier direction. Later investors also need to pay attention to relevant policy changes in Indonesia's nickel industry chain." Gu Jing said.
For the nickel market next year, Yuan Zheng expects that although the growth rate of demand may continue to slow down, the profits of the industrial chain will become thinner, and the growth rate of supply will also converge. From the perspective of supply and demand balance, although the nickel market is still oversupplied, the degree of excess or will weaken, so nickel prices continue to explore the space is not much. On the demand side, external demand is still expected to have a better performance, and it is also optimistic about the recovery of domestic demand, so it can be expected that demand will drive nickel prices to break through the upper range.
Dai Zizhao said that the market can focus on the possible production reduction of electrodeposition nickel and its raw materials and the supply situation of Indonesian nickel mines. From a static perspective, the surplus of pure nickel in 2025 is still very obvious. From a dynamic point of view, the current nickel price has been close to the integrated intermediate production of electrodeposited nickel cost line and the psychological lower limit of producers, the second half of this year began to electrodeposited nickel profit continued to be poor, next year investors can focus on electrodeposited nickel production reduction. In addition, the uncertainty of Indonesia's nickel ore production quota is still large, and next year also needs to focus on Indonesia's policy trends.