Nickel prices are expected to average $24,200/tonne in 2023 as increased production from Indonesia cools prices, according to the Australian government’s Resources and Energy April quarterly report seen by Kallanish.

While continued demand growth coupled with slowing global production is projected to move the market into deficit beyond 2027, the report says prices will still be lower than current levels at $19,900/t in 2028.

The report forecasts global mined nickel production to rise by 7.2% in 2023 to 3.4 million t, with Indonesia accounting for four-fifths of this increase. It says Indonesia will continue to lead global mined production growth out to 2028, when it is projected to reach almost 3.8m t.

It is noted that nickel prices averaged around $25,700/t in 2022 — a rise of 34% on-year. Growth was driven by the Russian invasion of Ukraine, as well as the fallout from the suspension of the LME nickel market.

Meanwhile, consumption for stainless steel production is expected to rise in 2023, in addition to accelerating growth in the production of battery technology.

Nickel demand is also forecast to grow 9.3% to 3.2m t in 2023 as a result. Growth in nickel demand is projected to remain robust in subsequent years, driven by both stainless steel and battery production.

Nickel consumption, on the other hand, is forecast to reach 3.8m t by 2028 — an average annual growth rate of 4.7% over the outlook period.

Meanwhile, after falling in 2021–22, due to the impacts of weather and labour shortages, Australian mined nickel production is forecast to increase by 8.3% in 2022–23 and reach 167,000 t. The country’s mined production is expected to peak at 253,000 t in 2025–26, before falling to 235,000 t in 2027–28.

The country's export volumes are forecast to increase to 164,000 t in 2022–23 and peak at 230,000 t in 2025–26, before easing out to 215,000 t in 2028.

Strong nickel prices over the past year have lifted nickel export earnings, which are forecast to grow by 14% to reach AUD 5 billion ($3.38 billion) in 2022–23. Softening nickel prices are expected to outweigh the increase in nickel export volumes over subsequent years, with export earnings projected to decrease to AUD 4.2 billion by 2027–28.