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Nickel prices seen falling in 2022 due to surplus - Antaike

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By Min Zhang and Mai Nguyen Nov 9 (Reuters) - Nickel prices in 2022 are seen falling from this year's multi-year highs, Chinese research house Antaike said on Tuesday, with the global market expected to swing into a surplus as production recovers from pandemic disruptions. The most-traded nickel contract on the Shanghai Futures Exchange surged to a record 161,510 yuan ($25,244) a tonne in October, when benchmark three-month nickel on the London Metal Exchange hit $21,425 a tonne, its highest since 2014.

But average LME nickel prices are seen declining to $17,000 a tonne in 2022 from an estimated $18,500 this year, Antaike analyst Chen Ruirui said at the China International Nickel & Cobalt Industry Forum.

A forecast 45,000-tonne global supply glut next year is pressuring price expectations, with 12% growth in output likely to outpace that of demand, estimated at 10%, data presented by Chen showed. Demand this year has been solid in both the stainless steel and battery sectors, while Chinese nickel output in 2021 could fall 13% year-on-year after new project developments failed expectations, alongside an increasing number of accidents. Production next year is expected to rise both in China and globally, however, though Chen said output of nickel pig iron (NPI), an input material for stainless steel, will fall further. "Nickel ore supplies, the power usage situation and production costs are the major reason that restrain NPI output," she said. NPI production requires a lot of power and China has been curbing output of highly energy-intensive sectors to reduce its carbon emissions and reserve electricity for residents ahead of the winter. The supply shortage this year is also severe in battery-grade nickel, Chen added.

Antaike also expected 2021 cobalt consumption in China and the global market to reach 109,000 tonnes and 165,000 tonnes respectively, benefiting from a strong battery sector. China's cobalt production is seen up 17.6% year-on-year in 2021 to 120,000 tonnes, said Liu Lei, another analyst with Antaike, at the conference. The global cobalt price in 2022 will fluctuate between $18-28 a pound, while the Chinese price will likely range within 300,000-400,000 yuan a tonne pending changes in raw material supplies, Liu said.

Summary of Antaike's nickel forecasts in thousand tonnes: 2019 2020 2021F 2022F Global production 2,371 2,497 2,680 3,013 Global consumption 2,402 2,374 2,705 2,968 Global balance -31 123 -25 45 China production 826 755 655 673 China consumption 1,272 1,348 1,505 1,600 Average price ($ a tonne) 13,942 13,863 18,500 17,000
($1 = 6.3980 yuan) (Reporting by Min Zhang in Beijing and Mai Nguyen in Hanoi; Editing by Jan Harvey)

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