Japan's top nickel smelter Sumitomo Metal Mining expects the global nickel market to remain in surplus next year, with production gains offsetting rising demand in key end-use sectors. SMM forecasts a global nickel surplus of 34,000 metric tons in 2027, narrowing from 38,000 tons in 2026, according to the company's half-year market outlook released on Tuesday. The contraction reflects a tightening balance as demand growth outpaces supply expansion.
Indonesian production of low-grade nickel pig iron (NPI) is expected to rebound 11.9% to 1.88 million tons in 2027, following a projected 2.3% decline in 2026 after government cuts in mining quotas. Indonesia accounts for more than 60% of global nickel output, making its production trajectory critical to market dynamics. SMM General Manager Shirou Imai noted that potentially higher mining quotas could further boost NPI output, while lower sulphur and sulphuric acid prices, key inputs in nickel production, could increase production of nickel intermediates such as mixed hydroxide precipitate.
Global nickel demand is forecast to rise 6% to 3.92 million tons in 2027, supported by steady stainless steel consumption and rising demand for specialty steel used in artificial intelligence data centres. Supply is expected to increase 5.8% to 3.96 million tons, maintaining the market surplus but at a tighter margin. SMM highlighted distinct dynamics between different nickel grades.
In 2027, a recovery in NPI production is anticipated to ease the shortage of Class 2 nickel, while the continued decline in Chinese cathode production will soften the surplus of Class 1 nickel. Class 1 nickel is high-purity refined metal used in batteries and other applications, while Class 2 mainly comprises NPI and ferronickel used in stainless steel. Battery applications represent a growing demand driver.
SMM expects global nickel demand for batteries to rise to 620,000 tons in 2027 from 560,000 tons in 2026, driven by continued growth in Chinese electric vehicle sales. The company supplies cathode materials for Panasonic lithium-ion batteries used in Tesla electric vehicles, positioning it to benefit from this structural demand growth. Source: Reuters via Kitco Metals.
Source: kitco.com