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Investing.com - The global nickel market is expected to remain in surplus through 2026 despite recent production cuts, according to a new UBS analysis released this week.
The market experienced "considerable surplus" from 2022 through 2024, with UBS noting that current nickel pricing and market positioning already reflect this weak fundamental outlook. Analysts do not anticipate a near-term demand recovery, citing falling stainless steel production rates and low probability of renewed battery demand growth.
Supply-side adjustments made some progress toward rebalancing the market in 2024, including approximately 250,000 tonnes of announced production cuts and 140,000 tonnes in project deferrals. However, UBS indicates these measures remain insufficient as Indonesia continues adding capacity despite some ore availability constraints.
Global nickel demand has shown relative strength compared to other major metals in recent years, but oversupply has triggered production cuts in China and Indonesia’s stainless steel sectors. UBS projects nickel demand growth to remain robust at 4-5% annually from 2025-2028, down from 9% during 2021-2024.
While UBS forecasts smaller market surpluses from 2025-2028, they will likely remain "large enough to add to increasing refined nickel inventories on the LME." The current LME nickel price sits around the 75th percentile of the cost curve, which has historically provided support, though the report warns nickel has traded "into the cost curve for extended periods" in the past.
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