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EU stainless market to remain under pressure: Eramet

The surplus in nickel production compared to demand is forecast to continue for the remainder of 2023, says French miner Eramet in its third-quarter earnings report monitored by Kallanish.

In Q4, demand for nickel is forecast to continue to increase thanks to the recovery in the electric vehicles batteries sector in China. However, a sluggish stainless steel market in Europe is expected. The nickel used in stainless steel is a different grade from battery nickel.

Prices of nickel pig iron and nickel ore exported by Eramet’s subsidiary in New Caledonia, Societe le Nickl (SLN), are seen flattening this quarter. The Weda Bay mine in Indonesia will pursue its production ramp-up but the company has revised downwards its target to around 30 million wet metric tonnes (wmt) over the year. In Q3, SLN sales decreased by 5% to €224 million ($236m), reflecting “a strongly unfavourable price effect”.

Global stainless production was up 16% on-year to 14.8 million tonnes in Q3 and increased by 3% over the first nine months of the year. The class I and II nickel supply/demand balance was at break-even over the third quarter but remained in surplus for the first nine months of the year, Eramet says.

Nickel inventories at the London Metal Exchange (LME) and Shanghai Futures Exchange (SHFE) were at 47,000t at end-September. In Q3, the LME price average of class I nickel was $20,342/tonne, down 8% y-o-y.

“The third quarter saw a difficult macroeconomic environment with selling prices significantly lower than last year,” says Eramet chief executive Christel Bories. The group’s turnover amounted to €980m in Q3, down 26% on-year owing to a negative price effect, compared to the high level seen in Q3 2022. January-September turnover reached €2.8 billion, down 30% on-year.

Class I nickel is produced with a nickel content above or equal to 99% while Class II is made with a nickel content below 99%.

Natalia Capra France