But Growing Demand EV Batteries Keeps Prices Above Pre-Pandemic Levels
Makers of electric vehicle batteries and the cars that run on them have benefited from surging output by Indonesia, the world's largest producer of nickel, a key battery component that soared in value last year. XH78T pipe/tube
However, nickel prices remain considerably higher before the Covid-19 pandemic. In addition, the world's leading international energy body reportedly is considering guidelines to address supply disruptions of the rare earth minerals used in EV batteries.
A surplus in the global nickel market should grow this year and persist through at least 2028, analysts recently told attendees at a large mining conference in Indonesia.
That surplus marks a stark departure from early 2022, when nickel prices spiked after Russia, a key global supplier, invaded Ukraine. In the weeks after the invasion, global prices shot up 40-45% to the highest level since mid-2007.
Indonesia, however, filled the supply gap. Already the world's largest producer of nickel ore, the country boosted production by 54% last year. Its output accounted for almost half of the world's total nickel production 3.3 million metric tons, up 21% from the previous year.
The latest forecast may ease concerns for EV battery producers and car makers. Depending on the exact type of battery, nickel makes up 50-80% of the minerals used in EV cathodes, which in turn account for about 30% of an EV battery's mass.
Despite last year's production surge, prices remain relatively high. Spot global prices this week fell to below $20,000 per metric ton, down from $30,424 at the start of the year and almost $34,000 in March 2022. But they remain 50-60% higher than just prior to the onset of the Covid-19 pandemic.
Higher post-pandemic prices, in addition to last year's supply hiccup, reflect burgeoning demand for EV batteries.
Ellie Wang, a Shanghai-based analyst with consulting CRU Group, predicts global nickel demand will reach 4.3 million metric tons annually by 2027, a 43% increase from 3 million metric tons a year ago and 30% more than last year's entire global production.
EV battery demand has placed increasing pressure on the world's suppliers of rare earth minerals -- including nickel, cobalt, manganese and lithium.
As a result, by the end of the year, the International Energy Agency reportedly will establish guidelines aimed at limiting import dependence on a single mineral supplier.
With supplies of rare earth minerals often concentrated among a few sources, the IEA reportedly will consider guidelines that mandate joint procurement beyond certain established import thresholds.
Asia.Nikkei.com. "Nickel surplus seen widening in 2023 as Indonesian output soars."
U.S. Geological Survey. "Mineral Commodity Summaries, January 2023."
Mining.com. "The key minerals in an EV battery."
Federal Reserve. "Global price of Nickel."
Asia.Nikkei.com. "IEA to set EV mineral import benchmarks to reduce overdependence."
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