Macquarie's latest nickel downgrade further dampens hopes of revival for BHP's suspended Nickel West

West Australian

a day ago

Macquarie Group has again downgraded its prognosis for nickel and by virtue increased the probability BHP's idle Nickel West is going to shut permanently.
The Australian investment bank published its quarterly commodities price forecasts on Friday, which casts even more doubt on the ability of Western Australia's largest nickel mining and refining operation — Nickel West — to come back to life.
Macquarie is predicting a tonne of nickel will now be $US14,500 by the end of this year, compared to the $US15,500/t price it had anticipated in a previous update three months ago.
The medium and longer-term forecasts for the battery metal have also taken another whack. Nickel is slated to average $US14,625/t in 2026, then $US16,500/t in 2027, $US17,500/t in 2028 and $US19,000/t in 2029.
In its March update, Macquarie projected $US16,500/t, $US17,000/t, $US19,000/t and $US20,000/t over the next four years.
Macquarie in December was pencilling in $US20,000 for 2028, which has now been slashed to $US17,500/t.
Macquarie — known colloquially as the 'millionaires factory' for the huge pay packets its legion of investment bankers receive — stated its repeated nickel downgrades reflect 'a likely structural over-supply' of nickel from new refineries in China and Indonesia.
'The pace of growth in class 1 production remains high, fed by ongoing rises in production of Indonesian low-cost MHP (mixed hydroxide precipitate),' it stated.
'Over-supply has led to the closure of over 500,000 tonnes per annum of non-Indonesian production since 2020 and pressure for further closures remains, but prices may have to have one final push to the downside to induce that.
'The overall market is closer to balance due to large scale production cuts.'
BHP in July last year announced its WA Nickel arm, which sustained 3000 jobs and counted the Nickel West mining operations as its centrepiece, would be put into care and maintenance. The Big Australian will decide whether to shut the operation for good by February 2027.
When BHP made its care and maintenance decision Nickel West's break-even cost was about $US20,000/t.
BHP Australia boss Geraldine Slattery said the mining giant had 'sufficient conviction' the nickel prices would stage a comeback towards the end of the decade and beyond, implying a predicted price materially above $US20,000/t.
Nickel has dropped from $US17,100/t to $US15,200/t over the past year, heaping more pressure on WA's last major nickel operation — Glencore's Murrin Murrin.
'Virtually all the world's laterite ores now come from just three countries, Indonesia, the Philippines and New Caledonia,' Macquarie stated on Friday.