Nickel: How 2023 trends will shape 2024

April 17, 2024

The demand for nickel — all over the world — has undergone considerable growth over the past two decades, with the market evolving from 1.12 million Mt in 2000 to 3.42 million Mt in 2020. However, 2023 posed fresh challenges to the industry, marked by volatile pricing dynamics, oversupply concerns, and uncertainties surrounding demand from China’s struggling property sector. Under these challenging conditions, nickel emerged as the weakest performer among LME base metals in 2023, with prices down by around 45%, according to ING.

In response to this turbulent market environment, nickel producers – from the C-Suite to process professionals and plant superintendents – should focus on what they can most readily control: operational excellence. While financial derivatives offer a hedging option to navigate fluctuating supply and demand dynamics, operational excellence stands out as the single most important tool at the disposal of nickel producers for gaining a competitive advantage and ensuring sustained business success amidst persistent market volatility.

Nickel overview

Nickel, the fifth most abundant element on Earth, plays a crucial role in various industries, from stainless steel production to electric vehicle (EV) lithium-ion batteries. Although reserves available for economically viable mining are limited, it is estimated that the current land resource base will endure for over 100 years at the present mining rate, according to the International Nickel Study Group (INSG). Geographically, Asia dominates the nickel market, with China alone representing nearly 60% of the world demand in 2020 (up from 39% in 2010).

The primary application for new nickel remains stainless steel production, with this market experiencing a growth rate of approximately 5.8% per annum, driven by demand across the automotive, consumer goods, and construction industries. However, nickel’s usage extends to alloyed steels, high nickel alloys, castings, electro-plating, catalysts, and chemicals.

What changed in 2023?

Supply and demand dynamics

The demand for nickel witnessed substantial growth in 2023 and is projected to increase by 9% in 2024. However, this surge in demand has also been met with a rise in production, presenting a challenge for balancing the market. Consequently, the global nickel market experienced a surplus of 223,000 Mt in 2023, over double the 104,000 Mt surplus in 2022. This surplus is noteworthy given that global nickel output reached approximately 3.42 million Mt in 2023. Projections from the International Nickel Study Group (INSG) indicate that this surplus is poised to expand to 239,000 Mt in 2024, marking the third consecutive year of excess supply.

The surge in supply stands out as one of the key drivers for nickel’s relative underperformance in 2023, which can be mainly attributed to class II and nickel chemicals—particularly nickel sulfate, rather than the historical association with LME deliverable/class I nickel. Indonesia has played a pivotal role in this supply surge, notably in nickel pig iron (NPI) and nickel mesh. To position itself as a significant raw materials supplier to EV battery manufacturers, Indonesia substantially increased its mined nickel production in 2023. Holding the largest nickel reserves, Indonesia produced an estimated 1.6 million tonnes in 2023, constituting nearly half of the global nickel production.

China’s influence

In China, the second-largest producer of nickel, class I output rose by over 36% YoY in the first three quarters of 2023, responding to historically high LME prices.

However, the Chinese housing market, marked by a considerable slowdown in the latter half of 2023, has added complexities to nickel pricing dynamics. In July, new-home prices fell by 0.23% in 70 cities, a slide that continued into December when they fell 0.45%. This downturn has strained the cash flows of real estate developers, leading to project delays and a diminishing trust in the property market.

Whilst there was initial optimism regarding Chinese stimulus measures to bolster metal prices in 2023, this enthusiasm is now waning, given the absence of a substantial stimulus package comparable to measures implemented during the 2008 financial crisis. Speculation is now growing that the economic slowdown in China might endure longer than initially anticipated, prompting financial institutions to downgrade their price outlooks for nickel.

Energy transition

Amidst the transition to cleaner energy sources, nickel has emerged as a key strategic metal due to its unique properties. The green transition, necessitating an investment of nearly $200 trillion through 2050, particularly targets EVs, upgraded power grids, and low-carbon power, with nickel playing a central role. Offshore wind turbines, for example, are contributing to heightened nickel demand, as these technologies are mineral-intensive, requiring approximately 15 times more nickel compared to traditional wind turbine installations

What’s more, with major carmakers heavily investing in EV manufacturing, the surge in nickel demand for lithium-ion batteries, known for their higher energy density, extended lifespan, and increased driving range, is expected to strongly impact the global nickel market in the coming years. McKinsey projects that by 2030, EVs and associated infrastructure will consume more than a third of global nickel production, a substantial increase from the current 17% demand attributed to EVs.

However, in the short term, the path forward for EVs is uncertain given that the market observed a notable slowdown in the latter half of 2023, particularly in the US. Several factors contributed to the smaller-than-expected appetite in 2023, including a consumer hesitancy to pay a premium for EVs, especially when faced with financing such premiums at high interest rates, as well as the comparative cost between electricity prices and fuel prices throughout the year. While it is yet to be determined whether this is a temporary occurrence or more of an enduring trend, there is notable uncertainty surrounding the trajectory of EV adoption, creating a volatile and unpredictable environment for the nickel industry.

Critical to understanding the significance of these 2023 trends is the fact that pricing volatility compounds enduring and widely acknowledged technical challenges. Nickel deposits are increasingly characterized by lower ore grades, needing more complex extraction processes, especially for laterite projects. Additionally, the energy required for metal extraction increases with decreasing ore grades, resulting in surging extraction costs, potentially rendering mining financially unsustainable if prices stay low.

What can we expect in 2024?

Ongoing volatility in industrial metals is expected to persist in 2024, influenced by factors such as a robust US dollar and weakened demand amid slow global manufacturing activity. Uncertainties in the metals markets, driven by economic growth concerns, geopolitical tensions, and strict monetary policies, continue to affect stainless steel and EV demand in particular.

Geographically, Indonesia’s NPI production is expected to rise, while China may witness a decrease in NPI production coupled with a rise in nickel cathode and nickel sulfate production. The uncertainty surrounding China’s recovery, especially in its troubled property sector, poses a significant challenge, restraining gains for industrial metals and sustaining volatility in the near term.

Despite a potential recovery in demand from the stainless-steel sector and EV batteries, forecasted nickel prices, averaging $16,600/t in 1Q 2024 and gradually rising to $17,000/t, indicate short-term pressure.

Achieving (and sustaining) operational excellence

2024 is likely to witness volatile pricing in an already prevalent background of diminishing metal grades and increasing orebody complexity. To navigate this challenging market, nickel producers must prioritize operational efficiency to ensure competitive advantage and long-term success. Businesses must make every dollar count, and operational excellence ensures that mining companies can extract maximum value from their mineral deposits.

Achieving and sustaining such operational excellence is a gradual process that hinges on creating a culture where all teams invest in constantly improving business outcomes. Undoubtedly, what lacks measurement cannot be managed effectively, and what isn’t precisely measured cannot be precisely controlled. Achieving compliance and excellence in metallurgical accounting practice, encompassing the representative and timely measurement of all significant metal movements and inventories in metallurgical operations, therefore appears as a necessary condition for meeting higher operational standards.

The data problem

Miners face challenges in transforming the abundance of data available at their operations and within the industry into valuable operational insights. A predominant root cause for this is the presence of data silos between departments, along with the widespread usage of spreadsheets for operational accounting and management across the metal value chain. This practice exacerbates integration issues as these homegrown systems struggle to present a unified source of truth.

Furthermore, poor representativeness and availability of certain data also preclude the ability to unlock valuable operational insights. This leads to inconsistent estimates for key performance indicators and operational models, affecting both analyses and predictions. Achieving operational excellence across the nickel value chain necessitates improving the representativeness of these estimates, which can be done through a combination of measurement retrofit and data reconciliation.

What are the consequences of relying on poorly representative data?

Firstly, poor estimates of metal movements and inventories inside and around mineral and metal processing plants pose huge risks of undetected material losses and lower-than-expected recoveries, which ultimately lead to lost profits when some revenues are not realized.

Secondly, poorly representative data from pit to port poses the risk of not shipping the right quantity and quality of metal concentrate at the right time. Shipping a lower quantity/quality of metal concentrate than the requirements may result in penalties and a loss of trust, while shipping a higher quantity/quality than required can lead to receiving insufficient payment in view of the actual production. This delicate balance highlights the importance of representative data in ensuring fair transactions and maintaining strong relationships with customers.

Finally, poorly representative data across the metal value chain may also lead to a lack of market responsiveness, resulting in lost profits when opportunities are not seized. Such low market responsiveness can be improved by extending the spatial scope and improving the timeliness of the metallurgical accounting system to produce representative valuation reports of a given metallurgical operation at a higher frequency. This is easier said than done, however, as doing so will require a higher measurement rate. This can be challenging, particularly for the inventories, let alone the pressure on the metallurgical lab throughput, which is more than often very limited. Importantly, this improvement path must be first implemented at each mineral or metal processing site and then fully integrated among a mining company for maximum operational and financial effectiveness, rather than being solely a corporate-level formality.

Overall, these risks and consequences could extend beyond immediate financial concerns to include reputational damages. Instances where companies are compelled to restate their financial statements not only create delays but also sow distrust, triggering stock drops and other adverse consequences.

To mitigate these risks, the metallurgical accounting system must be compliant with industry-acknowledged standards such as the AMIRA P754 Code of Practice for Metal Accounting. Such compliance requires, in a non-exhaustive manner, an adequate amount of data redundancy provided through a well-designed measurement system that has a fit-for-purpose measurement representativeness.

The importance of automation

To unlock the representative and timely information that operational excellence requires, an automated and systematic approach is essential. To this end, a focus on enhancing visibility across the entire metal value chain, connecting the front, middle, and back offices for greater transparency, is essential. Proprietary mathematical algorithms can be employed to create centralized dashboards serving as a “single source of truth” to address operational challenges.

A seamlessly integrated data management system across the entire metal value chain minimizes manual interventions and ensures a smooth flow of data from pit to port. This enables representative estimates of all significant metal movements and inventories, provided it is supported by regular equipment monitoring and system audits. Adopting a compliant and automated metallurgical accounting system should not only facilitate timely operational and financial reporting but also maintain detailed records for critical processes like audits, enhancing the overall transparency for mining companies.

While technology adoption varies among miners due to the industry culture of fearing the “first mover” reputation, champions of new technology at an operational level consistently yield the best outcome, and EY predicts that there will be a surge in data and technology adoption among miners in 2024.


As the nickel market continues to face complex pricing dynamics and oversupply uncertainty, companies must prioritize optimizing their operations to effectively secure profits and manage risks.

Operational excellence, a key differentiator for mining companies thriving in challenging environments, is unachievable let alone sustainable without first achieving compliance and excellence in metallurgical accounting. Mining companies that achieve and sustain such excellence can not only generate more profits from current deposits than competitors but also opportunistically capitalize on upcoming deposits having declining metal grades and increasing orebody complexity. Those who don’t embrace operational excellence risk falling behind in both current and future operations, potentially facing acquisition by competitors who have embraced and sustained operational excellence.

This article was originally published in Global Mining Review.

Don't miss out

Subscribe to our blog to stay up to date on industry trends and technology innovations.