Nickel’s at a Crossroads as Supply Boom Hits LME, Macquarie Says – by Jack Farchy (Bloomberg News – July 21, 2023)

(Bloomberg) — The nickel market is at a “turning point” with a wave of supply of the battery metal about to hit the London Metal Exchange and push down prices, according to strategists at Macquarie Group Ltd.

The nickel market has become increasingly disconnected since the huge short squeeze that roiled the market last year, as surging production of the most widely used forms of nickel drives those prices lower, while the refined metal traded on the LME is in much tighter supply.

That dynamic is set to shift as a result of new plants in China and Indonesia to convert intermediate forms of nickel into metal that can be delivered on the LME, the first of which was approved by the exchange this week.

The plants could add as much as 200,000 tons of nickel capacity by the end of next year, according to Macquarie. That could boost LME-deliverable supplies by 35% compared to 2022 levels. LME nickel futures fell as much as 1.3% on Friday.

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