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Nickel Supply Shortage and Market Implications

The International Nickel Study Group (INSG) recently revised its nickel supply forecast, revealing a much larger shortage for March 2024 than previously estimated. This adjustment, which indicates a supply deficit almost 30% greater than the same period last year, underscores the volatility and unpredictability in the nickel market.

Key Points:

  1. Revised Forecasts: The INSG has significantly downgraded its nickel surplus projections for 2024 by 55%. This substantial revision highlights a serious underestimation of supply constraints.
  2. Impact on Prices: The earlier misjudgement and subsequent correction by the INSG have already influenced nickel prices, leading to increased market volatility since autumn 2023.
  3. Market Sentiment: Despite the apparent deficit, some market analysts have been reluctant to acknowledge the severity of the shortage, echoing patterns seen in past market behaviors.

Critique of Market Analysts

The disparity between theoretical analysts and practical market participants is becoming increasingly evident. Analysts without direct trading experience have been criticized for their optimistic projections, which often fail to reflect real market conditions. This disconnect can lead to misguided strategies and market distortions.

Practical Implications:

  • Real Market Experience: Industry stakeholders emphasize the importance of relying on insights from those with direct market involvement to avoid overly theoretical or optimistic assessments.
  • Historical Patterns: The current situation mirrors past instances, such as in 2021, where theoretical forecasts were overly positive, ultimately harming real market participants who acted on these projections.

Broader Economic Indicators

Eurozone Growth:

  • Purchasing Managers’ Index (PMI): The PMI indicates growing momentum in the eurozone, showing an expansion for the third consecutive month in May. This growth is driven by both industry and service sectors.
  • Germany’s Manufacturing Sector: Germany has seen particularly strong growth, with its manufacturing industry index reaching a yearly high. This is reflected in robust incoming orders and a steady rise in employment.

Implications for Stainless Steel:

The combination of nickel shortages and strong industrial growth in key regions like the eurozone suggests potential upward pressure on stainless steel prices. The manufacturing sector’s expansion, especially in Germany, points to increased demand for stainless steel, further tightening the supply-demand balance.


The INSG’s correction of its nickel supply forecast highlights the need for accurate and practical market insights. The widening nickel supply deficit, alongside strong economic indicators in the eurozone, suggests increased volatility and potential price rises in the stainless steel market. Market participants should be cautious of overly theoretical analyses and consider multiple perspectives to navigate these complexities effectively.

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