Expert nickel market insights
Our quarterly nickel outlook is published in our Quarterly Metals Report, which covers base, precious and ferrous metals. The impact of supply and demand fundamentals and macroeconomic implications for the nickel futures and spot prices are analysed. Our research team produce a nickel price range forecast as part of the report.
Nickel Outlook – Q4 2022
The collapse of the nickel spread to a contango was triggered by the large supply of class 2 nickel from Indonesia. However, we still expect a class 1 deficit which could keep exchange stocks low, giving an impression of a tight market. Stainless production is significantly higher this year, but stainless-containing nickel has suffered. The forward curve suggests higher prices in the longer run, but we expect output in nickel products and NPI in Indonesia to present downside to the market. China’s re-opening would boost stainless demand through autos and properties, offering an upside as speculators re-enter the market before the fundamentals come back into play...
The macroeconomic outlook is deteriorating, and in our view, Europe and the UK are in recession already, and the US will be 6 months behind. Higher interest rates, in conjunction with elevated energy and electricity prices, are squeezing households’ disposable income, and new mortgage rates are considerably higher and are now a fixed cost to the consumer. We expect end-user demand to decline, and this will have an impact across the whole supply-chain; although material availability is poor for metals with bonded and exchange warehouses low in stock, this will lead to a dislocated market and volatile price action in spreads, while the macro impacts the flat price. The 20th Party Congress has ended, and their COVID policy is here to stay. As a result, sentiment in China has declined, and if the output of refined materials rises, this will put further pressure on prices. The Fed has increased the rates by 75bps with 50bps to come, but investors are looking at where they pivot, and any dovish language will cause a selloff in the dollar, giving rise to metals prices. If Chinese demand returns and the dollar weakens, this could present significant volatility and price rises, compounded inflationary pressures.
We will email you each time a new report has been published.