Total world nickel production in 2009 will be just over 1.3m tonnes, down 5% year-on-year, commodities analyst Macquarie Research estimates. This is slightly ahead of demand, which is put at 1.29m t, but well below global production capacity of 1.7m t.

This year has seen the closure of more than 300,000 t/y of nickel production capacity due to the downturn in demand. But the analyst says the recent purchase of BHP Billiton’s idled Ravensthorpe nickel project, and its potential restart, brings back into focus “the justifiable optimism” about the nickel market outlook, mainly driven by booming Chinese demand.

Macquarie “conservatively estimates” that just under 700,000 t/y of new nickel capacity is planned and committed for 2009-14. Factoring in the likely ramp-up rate, global nickel production capacity is expected to be “more than 2m t/y” by 2014. At that point it is estimated that world nickel demand will be 2.04m t, Steel Business Briefing notes.

Nickel pig iron (NPI) production in China has been an important component of the nickel supply equation in Asia in recent years, but in the medium term production is expected to peak (in 2011) and then decline in the face of lower cost new capacity elsewhere.

In China, Macquarie expects blast furnace and low grade NPI capacity to fall and be partly replaced by conventional ferronickel production.

Steel Business Briefing, 14th December 2009