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Nickel miners need to increase Class 1 output to meet steel, EV demand: Bank of America

August 20, 2021    



Bank of America Securities cited “phenomenal” demand from the stainless sector in a research note, accounting for 70% of global nickel consumption as well as a longer-term demand from electric vehicles expected to reach a penetration rate of 51% by 2030.

“Keeping in mind exponential demand growth, a key concern of the nickel market is the extent to which miners will be able to prevent any shortages. We currently forecast a discrepancy in the total, i.e. refined and non-refined combined, market balance (in surplus) and the balance excluding non-refined nickel pig iron (in deficit) over the coming years,” Bank of America said.

While combined nickel production is expected to post a surplus in 2021 due to increasing supply from Indonesia in the second half, Bank of America expects tightness in refined Class 1 nickel for the year, with a deficit of 41,000 mt compared with a growing surplus for Class 2 nickel Pig Iron (NPI).

“Ultimately, miners will need to produce more Class 1 and perhaps less Class 2 nickel to make sure the metal will not turn into a constraint to the EV industry,” Bank of America said, adding that “Indonesia, with its resources, will likely remain key to accomplish that.”



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