The Australian Bureau of Resources and Energy Economics (BREE) has revised its estimations for Australian nickel production in 2012-13. According to the latest estimates, world refined nickel production increased to around 1.7 million mt in 2012, nine percent higher than 2011 as a result of higher production in Brazil, Colombia, China and Australia. BREE noted that the ongoing shutdown of the Vale Onça Puma refinery in Brazil due to smelter problems, and curtailments in Australian production, are forecast to offset these production increases.
The BREE report indicates that Australia's refined nickel production in the fiscal year 2012-13 is forecast to amount 124,000 mt, up two percent compared to FY 2011-12. On the other hand, nickel mine production in Australia in FY 2012-13 is forecast to decline three percent year on year to 229,000 mt as a result of a 30 percent reduction in output at Nickel West's Mt Keith mine and Xstrata Nickel Australia placing its Cosmos mine on care and maintenance. In FY 2013-14, mined nickel production in Australia is forecast to decrease by a further six percent, compared to FY 2012-13, to total 216,000 mt.
According to BREE, international nickel spot prices are forecast to average around US$17,586/mt for the whole of 2013, indicating an approximate 2.3 percent year-on-year decrease. Weak business sentiment is expected to keep nickel prices low, although the volatility that has characterised nickel prices in recent years may at times push prices to higher levels for short periods of time. However, the nickel spot price is projected to increase over the 2013-2018 period at an average annual rate of 2.5 percent to around US$20,728 in 2018 (based on current US dollar value). Projected demand growth, underpinned by increased construction activity in China and India and by rising industry supply costs will support higher prices over the medium term.
In the fiscal year 2011-12, export volumes of nickel from Australia are forecast to increase by two percent year on year to total 246,000 mt, in line with higher mine and refined production. Despite higher volumes, export earnings are forecast to decrease 12 percent to $3.3 billion due to a lower forecast Australian dollar nickel price in 2012-13. Australian nickel export volumes are projected to increase at an average annual rate of around two percent to total 276,000 mt in 2017-18.