The stainless steel industry is likely to remain the leading driver of nickel demand going forward, while the battery market -- notably for electric vehicles -- is set to become the second-largest user of nickel units "by a significant margin", Olivier Masson, senior analyst at Roskill, told the Bureau of International Recycling June 2.
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China and Indonesia continue to be key players in global stainless steel developments, having increased their combined share of total stainless production from 52% in 2015 to 64% last year.
As a result of their continued heavy reliance on primary nickel units, the global scrap ratio in stainless steel production slid to around 37% in 2020 from nearer 42% five years earlier, Masson added.
The outlook for scrap in a shifting nickel-use landscape occupied much of the discussion at the online meeting of the BIR Stainless Steel & Special Alloys Committee.
The pandemic-related 2.4% contraction in global stainless steel consumption last year was actually smaller than the declines witnessed at the time of the global financial crisis of 2008 and 2009, Masson told the meeting.
Steep year-on-year falls in the US (-17%), Europe (-9%) and Japan (-6%) were largely counterbalanced by consumption growth of more than 6% in China on the back of its government's metals-intensive stimulus plan.
Masson said he sees "a gradual increase in the scrap use in China" but only "a very, very small one" because of "the increased availability of NPI".
If China were to "put a cost" on mills' carbon emissions and on the environmental footprint of raw material production processes, this could bring greater use of scrap, he said.
The shift in legislation to favor Electric Vehicles (EVs) means nickel units required in battery production will surge by a factor of four or five in the years to 2030, Alina Racu, nickel market analyst at Nornickel, told the meeting.
Despite a tumultuous coronavirus-hit 2020, global electric vehicle sales had exceeded all expectations, even doubling in Europe owing to green recovery incentives, she said.
This change means the market is showing concern over the availability of suitable nickel units to meet this huge demand increase from the battery sector, Racu said.
Potential sources could include exchange stocks, high-pressure acid leach extraction projects and conversion of nickel matte to high-grade Ni, while increased NPI production would create a usage shift in nickel units.
But while recycling of spent vehicle batteries could bring extra units into the market current volumes are still very small, she noted, adding it could take a further 10 to 20 years for significant quantities to start to become available.
Racu said she anticipates a continuing recovery in the stainless steel market, to the extent that production in the Europe, Middle East and Asia region could well return to 2019 levels this year whereas the same was unlikely to happen in the USA, Japan and India.