FX.co ★ Nickel Falls to Over 8-Month Low

Nickel futures dropped to $14,270 per tonne in December, marking their lowest point in over eight months and nearing the four-year low experienced in April. This decline is attributed to the market's assessment of abundant supply coupled with subdued industrial activity in China. Russian company Nornickel, renowned as the world’s largest palladium producer and a significant refined nickel supplier, has significantly increased its surplus predictions, forecasting an excess of 240,000 tonnes by 2025 and 275,000 tonnes by 2026. Meanwhile, the London Metal Exchange (LME) stocks have surpassed 250,000 tonnes, underscoring the ongoing pressures of oversupply. The slowdown in Chinese factory output and falling property prices have reduced demand for stainless steel, which represents the largest end-use application for nickel. Additionally, there has been a decline in nickel pig iron and battery-grade nickel sulfate, driven by cautious restocking practices. Global smelting activity reduced in November, with Indonesia experiencing a 2.4% decrease; however, the production of higher-grade Class 1 nickel remained robust, keeping inventories eligible for LME storage at elevated levels.