Sumitomo cuts FY23-24 Madagascar nickel output guidance

Japanese trading firm Sumitomo has announced a cut in nickel production guidance at its Ambatovy project in Madagascar for the April 2023-March 2024 fiscal year.

Sumitomo has revised down Ambatovy's nickel output from November's forecast of around 40,000t to slightly above 30,000t on 5 February, mainly because of plant issues that emerged late last year.

Ambatovy's total earnings are likely to fall by ¥17.4bn ($118mn) for 2023-24, according to its latest quarterly report. The forecast, lowered compared to November 2023, is largely the result of weak nickel and cobalt prices and projected lower nickel production.

Argus' class 2 nickel benchmark Indonesian Nickel Index (INI) for 10-14pc nickel pig iron fob Indonesia was at $114.70/metric tonne unit (mtu) on 2 February, unchanged from 26 January, but about $15/mtu below November 2023 levels. The INI for 37pc mixed hydroxide precipitate (MHP) and 70pc matte indices were also about $15-20/mtu lower compared to November levels, although there were some small rebounds in recent weeks.

The benchmark price for class 1 nickel on the London Metal Exchange has fallen by about 20pc in the past six months to around $16,000/t on 5 February from above $20,000/t in early August.