▲ Nickel price and LME inventory indicators (Source: Korea Resources Information Service)

Non-ferrous metal supply will be affected
Refined nickel inventory of just 100,000 tons

Nickel (Ni), whose price has been steadily rising recently, is likely to see a sharp increase in cost due to the conflict between Russia and Ukraine.

TrendForce reported on the 25th that “the conflict between Russia and Ukraine is expected to not only cause a surge in natural gas and crude oil prices, but also affect the supply of non-ferrous metals, including aluminum, nickel, and copper.”

According to the Korea Resources Information Service (KOMIS), as of March 1, the price of nickel was trading at $25,450 per ton, up $6,870 from the same period last year. Nickel inventories on the London Metal Exchange (LME) stood at 79,524 tons, down 171,060 tons from March 1 of last year.

Nickel is a key raw material for next-generation electric vehicle batteries.

Global nickel production in 2021 was approximately 2.7 million tonnes, with the main producers being Indonesia, the Philippines, and Russia.

Russia's nickel production, including low, medium, and high-grade nickel, accounts for about 9% of the world's total, ranking third.

As the market penetration rate of new energy vehicles is accelerating, the demand for nickel, a raw material for automobile batteries, is expected to increase.It appears to be.

Even if Russian nickel exports remain unaffected for the time being, it is only a matter of time before the conflict between Russia and Ukraine escalates and impacts global nickel supplies.

Nickel prices will soar, further intensifying cost pressures on end-use markets like electric vehicles.

TrendForce expects Indonesia's active nickel production will help improve supply and demand in the second half of 2022, as Indonesia has been a key nickel ore smelting and processing hub in recent years and its nickel ore production accounted for approximately 37% of global total production in 2021.

Regarding Indonesia's ban on mining exports announced last year, TrendForce emphasized that "the export ban only applies to raw ore, and does not prohibit Chinese companies such as Zhejian Huayou Cobalt, Tsingshan Holding Group, Lygend Resources, and GEM from investing in the processing of nickel mines in Indonesia."

Therefore, nickel ore smelting and highly processed products are not affected by the export ban.

From a supplier's perspective, among the world's top five nickel ore producers, Russia's Norilsk supplies 9% of the world's nickel raw material, which is close to 90% of Russia's production.

Additionally, it ranks 22nd in the world in high-grade nickel production and 1st in the world.

China's Jinchuan Group comes in second with 17%, followed by Switzerland's Glencore with 13% and Brazil's Vale SA with 12%.

TrendForce predicts that if Europe and the United States impose sanctions on Russia, there will be a shift in the flow of Russian nickel due to the production and processing of high-enriched nickel in Norilsk.

Next, high-grade nickelThe report said that the market share of semi-ternary cathode materials soared from 10% in 2019 to 40% in 2021 due to their advantages of high energy density and low dependence on the precious metal cobalt.

The accelerated adoption of new energy vehicles in the United States, Europe, and China has increased market demand for lithium-ion batteries, leading to a decrease in nickel inventories.

Current refined nickel inventories are only 100,000 tons.

Inventory shortages and increased demand have affected prices.

In the Chinese market, which accounted for 53% of the global new energy vehicle market in 2021, electrolytic nickel reached KRW 24.8 million to KRW 28.63 million per ton.

TrendForce reported that, “If the price of electrolytic nickel soars to 32.45 million won in early 2022, the possibility of further price increases cannot be ruled out.”