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LME nickel experienced a notable downturn of 9.3% during the fourth quarter of 2023, extending its year-over-year decline to more than 40%. This can be attributed largely to the substantial increase in Indonesian nickel supply, which now accounts for a staggering 50% of total global supply. The oversupply situation, coupled with elevated stocks on the LME and Shanghai Futures Exchange, significantly impacted nickel and made it the weakest-performing base metal throughout 2023.

Moreover, the sluggish economic recovery in China has constrained demand for stainless steel, thereby adversely affecting nickel demand. The potential success of China’s initiatives to bolster its real estate sector could serve as a positive development for the LME nickel market. In early 2024, however, many economists are projecting a continued downward trajectory for the Chinese economy.

January brought subdued trading activities, albeit with some improvements among global economies. However, these improvements have not instilled adequate confidence among central banks to commence interest rate reductions. With nickel prices hovering around an average of US$ 16,000 per tonne, higher-cost nickel producers are feeling the pinch. This is evidenced by the recent voluntary administration of Australia’s Panoramic Resources and by other producers implementing workforce reductions and scaling back production.

The US Federal Reserve’s indication of impending rate cuts, potentially in May rather than March, is expected to provide a boost to LME nickel, particularly with the anticipated weakening of the US dollar. Amid a market landscape characterized by minimal optimism and thin trading volumes, any positive developments are eagerly awaited. This sentiment resonates across various superalloy metals, with a dearth of uplifting news to inspire investor confidence.

On a brighter note, demand for superalloy scrap remains robust, with Inconel grades 718 and 625 being top dogs among the wrought alloys. Moreover, there is a growing demand for NiCo alloys. Producers are adding to already busy order books, with the aerospace sector remaining at the forefront. For its part, the industrial gas turbine business is expected to witness a resurgence in 2025, marking a significant year for new installations.

However, processors are grappling with challenges stemming from merchants and suppliers holding on to materials owing to the sharp decline in nickel prices, resulting in increased competition and elevated costs for alloy scrap. Additionally, transportation disruption, exacerbated by recent issues in the Red Sea, have impeded the recovery of logistics from COVID-related challenges. Rerouted shipments to and from the Far East have incurred additional costs and delays, thereby impacting container availability and driving up prices on European and US shipping routes.