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Speaking at the Australian Nickel Conference on Tuesday, WoodMac principal analyst for nickel, Angela Durrant, noted that the stainless steel market currently accounted for about 70% of nickel consumption; however, out to 2040, this figure would drop to around 53% as battery precursors for electric vehicles (EVs) became increasingly important.

“In 2020 we estimate that battery precursors for EVs accounted for 7% of total consumption, but by 2040, we expect that this would have climbed to 30% in the 20-year period. We are forecasting consumption of nickel to more than double from 2.4-million tonnes in 2020 to 4.9-million tonnes in 2040,” said Durrant.

“The bottom line is that we are anticipating solid growth in demand for battery precursors, above all other first use sectors. This view is supported by our projections for EV car sales over the same 20-year period. We currently forecast annual sales of passenger EVs to exceed 49-million in 2040, compared to around 3-million in 2021 and 2-million in 2020.”

Durrant told delegates that nickel sulphate production in 2021 is likely to exceed demand, with the trend to continue until 2025. However, after this point, new investment in nickel sulphate capacity would be required to meet growing demand.

Over the next five years WoodMac estimated that some 37% of nickel sulphate would be sourced from laterites and about 40% from sulphate deposits, while dissolution would account for around 15% of nickel sulphate supply and recycling around 8%.

“Our current outlook for the short term nickel market is one of tightness, primarily due to the stagnation of demand in 2020 due to the Covid-19 pandemic; demand has surged with most of the leading nickel consuming regions returning to their 2019 levels.

“We currently estimate demand to increase by a whopping 17.3% in 2021 to total 2.8-million tonnes, firmly bringing the market back into balance following last year's surplus of more than 150 000 t. The rebound in demand coupled with the future need for nickel and electrification has supported high nickel prices throughout 2021, and we currently estimate an annual average of $18 475/t. The strength in prices will continue in 2022 before falling,” said Durrant.