Indonesian firms fret as demand for electric cars slows and nickel prices plunge

According to Yonhap News Agency on Jan. 23, citing Jakarta Globe and Bloomberg and other media, the price of nickel on the London Metal Exchange on the previous day was $16,007 per ton, which was halved compared with a year ago and the lowest level since 2021, and Indonesian companies, the world's top nickel producer, were worried. For such a sharp drop in prices, experts explained that this is because the demand for electric cars is slower than expected, and there is an oversupply of nickel, the core mineral for electric car batteries.

Global electric vehicle sales increased from 10.5 million in 2022 to 13.8 million last year, an increase of about 311 TP3T. But compared to the previous year, the rate of increase in sales slowed by half from 61.5% in 2022. The growth rate of electric car sales is forecast to slow further to around 20% this year. Coupled with the fact that BYD, the world's largest car sales company, is using low to mid-priced lithium iron phosphate batteries that do not require nickel, and Tesla has introduced products that use lithium iron phosphate batteries, there has been a corresponding decrease in demand for nickel, leading to a drop in prices. Illegal nickel exports also negatively affect nickel prices, with smuggling being more profitable, so the vicious cycle of further international price declines continues, the Indonesian Mining Association said.

In this case, Indonesia believes that instead of selling nickel as a mere mineral, it should export it in the form of products through smelting and refining domestically, which can increase the added value and cultivate the related industries, and ban the export of nickel minerals from 2020, and instead cultivate the refining and smelting industries through large-scale investment.BMO Capital Market's raw materials research Colin Hamilton, head of the global nickel market, said that the pressure on the global nickel market is becoming more and more obvious, with the oversupply last year, in order to maintain the equilibrium of the nickel market, the need to temporarily or permanently additional production cuts.

Sources of information:Ministry of Commerce of the People's Republic of China