Vale Indonesia’s financial outlook for 2024 appears challenging as industry analysts predict a downturn in performance due to declining nickel prices and market dynamics. The expected dip comes amidst an oversupply of nickel, primarily fueled by extensive downstream activities within Indonesia. Contributing factors include an accumulation of supply chain inventories and a slowdown in economic activities from major consumer markets like China.
Market research suggests that this trend of oversupply and reduced demand could extend into 2025, impacting Vale Indonesia’s revenue and net profit significantly. Projections indicate a potential decrease in revenue by 18.69% to US$1 billion and a net profit drop of 49.69% to US$138 million.
Adding to Vale Indonesia’s challenges are shifts in the electric vehicle (EV) industry’s battery technology preferences. The growing adoption of Lithium Ferro-Phosphate (LFP) batteries, noted for their longevity and lower thermal risks, poses a threat to nickel demand. LFP batteries are projected to capture 48% of the EV market by 2033, closely followed by Nickel Manganese Cobalt (NMC) batteries at 43%. Despite this, NMC batteries continue to find favor in Western markets due to range concerns.
Financial analysis also highlights the pricing dynamics between NMC811 cells and LFP batteries, with the former commanding a significant price premium. The future pricing trends may hinge on policy adaptations, particularly in the context of international regulatory adjustments.
Vale Indonesia’s stock performance has been robust in comparison to its peers, especially against the backdrop of fluctuating nickel prices. However, recent trends indicate a potential overcorrection in Vale Indonesia’s stock price relative to its industry counterparts. Despite the current market volatility, analysts recommend maintaining positions in Vale Indonesia, with a target price adjustment reflecting the ongoing industry shifts and economic conditions. 
