Macquarie bullish on nickel rebound around the time BHP will make a permanent decision on Nickel West

The millionaire’s factory believes the value of nickel will rise about 40 per cent over the next four years thanks to problems in China and Indonesia. Macquarie predicts the nickel spot price will reach $US23,000 per tonne in 2028, compared to its current value of $US16,150/t. The bullish projection is underpinned by about 400,000 tonnes of the metal being pulled out the global supply chain from mine closures. These mine shutdowns were induced by cratering nickel prices as cheap output from Chinese-backed Indonesian miners began to flood the market in 2023. “Our assessment of the 2024 surplus continues to be reduced due to ongoing market-related cuts in nickel production and growing losses from Indonesian production due to ore shortages; partly weather-related, partly delays in licences for production and partly due to a sharp fall in ore grades,” Macquarie said in its quarterly commodities forecast. The Australian banking giant also says infrastructure costs are on the up in China and Indonesia, which is putting further pressure on supply. The Macquarie prediction comes about two months after BHP announced it would “temporarily suspend” its WA Nickel arm from October until at least February 2027, amid the Indonesian supply glut. BHP had previously called the Indonesian glut a “structural” change in the market. But BHP’s Australia boss Geraldine Slattery is upbeat the nickel market could turn a corner by 2028. “We’ve got conviction on the market beyond the late 2020s, and committed to coming back to the market no latter than February 2027 to advise on that,” Ms Slattery said in July. “Now, of course, there’s uncertainty with that, but we’ve got sufficient conviction to maintain investment in the option of bringing the Nickel West business back . . . that’s why we’ve been very specific about the temporary suspension and the investment in exploration to maintenance and integrity of the facilities.” BHP will to invest approximately $450 million annually in the nickel facilities to enable a potential re-start, including keeping 400 people directly employed in the business division. Thousands of WA nickel jobs have been wiped out over the past year and BHP Nickel West was the largest nickel domino to topple. The business division joined the likes of Andrew Forrest’s Wyloo, Panoramic Resources and First Quantum Minerals. Macquarie also believes the iron ore price will be $US75/t in 2028, in line with the WA State Government’s current forecast. The price is expected to be dragged down by Rio Tinto’s huge West African joint venture coming online. “Large project additions, principally Simandou reaching shipments of 90 million tonnes by 2028, create the risk of a structural surplus, until prices force a rebalancing.”