Norilsk Nickel is not going to significantly reduce nickel production in 2023, hoping to sell all of the produced metal, including through increased supplies to China. According to experts, the price of nickel this year may again test the level of $30,000 due to the opening of the Chinese economy and the expectation of growth in consumption of the metal in the segment of stainless steel and battery production.
Norilsk Nickel plans to cut nickel production in 2023, but to a lesser extent than expected. The company intends to produce 204-214 thousand tons of metal this year, which is slightly lower than the production forecasts given for 2022 (205-215 thousand tons) and the actual fulfillment of these forecasts (218.7 thousand tons). According to the agency Bloomberg, Norilsk Nickel warned its clients about plans to reduce nickel production by 10% against the backdrop of a surplus and the refusal of European companies to purchase Russian metal. In addition to nickel, the company does not rule out a decrease in output of other metals from its portfolio: copper, palladium and platinum.
Posted January 24 operational report The company says that the output of finished products in 2023 will slightly decrease due to the repair of the PVP-2 (flash smelting furnace) of the Nadezhda Metallurgical Plant.
Although geopolitical risks will continue to affect the company's operations, Norilsk Nickel intends to sell all the metal that will be produced.
“We generally believe that the market is normal, especially for nickel, the price of which is stable. Therefore, we believe that we will produce volumes close to 2022, this will also be sold. Perhaps the only thing is that the share of China will be larger. But this (growth in the share of China.— "b") will happen in any case,” Sergey Stepanov, senior vice president of the company, told reporters.
Sergey Stepanov, Senior Vice President of Norilsk Nickel, January 24:
“The market for nickel is normal, the price is stable, so we believe that if we produce volumes close to 2022, they will be sold.”
According to the top manager, the increase in China's share is due to the fact that inside the nickel market there is a redistribution of demand from the production of stainless steel to the production of batteries. “We have a little more Chinese contracts, Asian contracts, specifically with battery manufacturers. Moreover, at least 70% of the changes are caused not by the political situation, but by changes in the sources of demand. Some segments are stable, some segments are growing, and we are actively trying to change the range of products,” he said.
November review of metals Norilsk Nickel is talking about an increase in the nickel surplus forecast from 109 thousand tons in 2022 to 110 thousand tons in 2023. The total metal production will increase by 8%, to 3.45 million tons, while consumption will increase by the same 8%, to 3.34 million tons. The surplus will again be seen mainly in the low-grade material segment, although it will also extend to high-grade nickel used in batteries.
The current price for nickel on the LME is $28.5 thousand per ton, but, according to Boris Krasnozhenov from Alfa-Bank, this year it can test the level of $30 thousand per ton.
The analyst says nickel demand in China will continue to grow over the medium term at 3-4% per annum, with the stainless steel sector accounting for about 70% of nickel demand. In turn, demand for stainless steel in China will be supported by large investments in the construction sector, as the Chinese government plans to move about 500 million people from rural areas to cities as part of a “dual circulation” strategy, Mr. Krasnozhenov notes. In addition, demand for nickel is growing from the green energy sector, including for electric vehicle batteries.
Norilsk Nickel's production forecast for 2023 reflects a normalized level of production, adjusted for planned repairs, comments Boris Krasnozhenov, and the growth in base metal production in 2022 was associated with a low base for comparison in 2021, when a number of the company's assets suffered accidents.