ING forecasts nickel prices to remain under pressure in the short term as a surplus in the global market builds and a slowing global economy mutes stainless steel demand, Kallanish notes.

The research house sees nickel prices averaging $21,000 per tonne in the third quarter and $20,000/t in the fourth quarter.

According to ING, nickel has been the worst-performing metal on the London Metal Exchange (LME) so far in 2023 with prices slumping 37% in the first half of the year.

“This underperformance is likely to continue as we head into the second half of 2023 with the market likely to test lower levels amid a weak macro picture and sustained market surplus,” it says.

One of the key drivers for the price decline has been the disappointing recovery in Chinese demand. Indonesia’s surging output is set to keep the market in surplus in the third quarter, further pressuring prices.

However, ING analysts believe the downside will be limited, due to tightness in the LME deliverable market.

“Prices should, however, remain at elevated levels compared to the average prices pre the historic LME nickel short squeeze,” it says.

This is due to nickel’s role in the global energy transition and the metal’s appeal to investors as a key “green metal” supporting higher prices in the longer term.

Looking further ahead, ING sees nickel prices averaging $20,000/t in 2024 and $23,000/t in 2025.