TOKYO (Reuters) - Global demand for nickel used in batteries is expected to rise more than 20% this year on solid demand for electric vehicles (EVs), Japan's biggest smelter of the metal Sumitomo Metal Mining said on Tuesday.
Sumitomo Metal, which supplies cathode materials for the Panasonic (OTC:PCRFY) lithium-ion batteries used in Tesla (NASDAQ:TSLA) EVs, said demand for nickel used in rechargeable batteries will climb to more than 410,000 tonnes in 2022 from nearly 330,000 tonnes in 2021.
Nickel is mainly used in stainless steelmaking, but is also a vital ingredient for the lithium-ion batteries used to power EVs, where demand is set to accelerate over coming years.
"Nickel demand for EVs is growing much faster than we had expected a year ago," Yusuke Niwa, general manager of Sumitomo Metal's nickel sales and raw materials department, told reporters.
But higher nickel prices may erode demand in the long term as companies will work to use less nickel or develop nickel-less batteries, he said.
Sumitomo Metal also predicted that the global nickel market deficit will narrow to 68,000 tonnes this year from 135,000 tonnes in 2021 as output of nickel pig iron (NPI) in Indonesia is expected to grow to more than 1 million tonnes.
Global demand for nickel is seen increasing by 8.4% in 2022 to 2.999 million tonnes, while supply is expected to climb by 11.4% to 2.931 million tonnes.
Japan's nickel demand is projected to rise 0.2% to 170,400 tonnes, while supply is forecast to increase 1.6% to 168,800 tonnes.