Europe is the second largest finished demand source after Asia, contributing to ~9.1% of global demand. In 2022, it is forecast to consume 261kt of nickel. Soaring energy prices in the region has greatly reduced stainless-steel production.
This
caused quarterly demand to drop by a drastic 26%, from 74kt in the March quarter to 55kt in the September quarter of 2022. As energy security stabilises
and prices cool, demand is expected to recover.

Finished
demand will then grow by a CAGR of 3.5% to 311kt in 2027, and by a further CAGR
of 4.1% to 523kt in 2040. Demand will remain dominated by the stainless-steel
sector, while growth will be supported by battery developments. Europe is fast
becoming a hotspot for Gigafactories, with over 30 factories proposed and half
a dozen commissioned by the end of 2022.
EVs
Driving the Region
Europe’s battery production capacity will
partly be fed into its growing EV market, which has reached 20% of total
vehicle sales. In 2022, Europe is estimated to have sold 2.6m EVs, equivalent
to 24% of global sales.
High inflation rates and a stagnating economy
will prevent it from reaching 2021’s record growth. In 2021, European EV sales
increased by a staggering 49% to 2.2m, from 1.5m in 2020.
Germany,
Europe’s largest EV market, sold 832k units in 2022, following a slow year due
to high energy and raw material prices. This is followed by France, who sold 346k
units.
Stainless
Struggles
Reduced
gas and oil imports from Russia due to deteriorating diplomatic relations has
forced energy prices to spike. In Belgium, producer Aperam has not resumed
production at its Genk plant after the scheduled summer maintenance break, due
to the energy intensive nature of the operation. Scrap recycling at Charleroi were
curtailed.
Outokumpu
also reflected difficulties in adapting, since 45% of its total energy is
consumed in stainless-steel production. Fortunately, operations powered by
renewable sources have been less affected. The company’s plants in Finland and
Germany have been hedged with long term wind contracts, with production
remaining relatively stable.
Germany
The
largest finished demand source in Europe is Germany, who is forecast to consume
51kt in 2022, a 7.3% drop from 2021 due to reduced stainless-steel production. The
biggest plants are in Siegen, Witten and Wetzlar. Mills with lower capacities
are also located in Völklingen, Gröditz and Freital. Finished demand will then
grow by a CAGR of 8% to 75kt in 2027.
Three large scale battery projects, owned
respectively by CATL, Tesla and Northvolt, are expected to be developed and
ramped up within this time. Demand will then continue growing at a CAGR of 7%
to 181kt in 2040. Growth is expected to be propelled by the battery sector,
with new Gigafactories coming online.

Germany
is aiming for carbon neutrality by 2045, and to achieve 65% emissions reduction
by 2030 compared to 1990 levels. However, the country was forced to
recommission and extend numerous coal power stations in 2022 as Russian gas
supplies became increasingly unstable. In 2020 Germany emitted 644.31Mt of
carbon emissions. The country’s emissions have dropped since the peak of 800Mt
in 2016.
Chinese
battery giant CATL has commissioned its 14GWh Contemporary Amperex Technology
Thuringia (CATT) plant. The EUR1.8bn facility is the company’s first
international production facility, and will supply auto manufacturers including
BMV, Volkwagen and Volvo etc.
The
EV tax credit mentioned in the US’ Inflation Reduction Act is shifting attention
away from developments in Europe. Swedish manufacturer Northvolt AB announced
that priority may be given to the North American market in the next three
years, by postponing construction of the Northvolt Drei Gigafactory in Heide. This
may divert finished demand away from Germany.
Production at Drei was originally
scheduled to commence in 2025, producing 60GWhpa of batteries. The company has
plans to ensure that over 50% of its cells will be made from recycled materials,
and to reduce the carbon footprint of a battery cell from an average of 98kg to
10kg by 2030.
Tesla
also has an existing factory in Berlin, which was commissioned in March 2022.
However, production suffers from continuous quality control and ramp up issues.
It was recently revealed that production may be placed on hold, as equipment is
being moved to Giga Texas instead.
Italy
The
next largest demand source in the region is Italy, who is forecast to consume 47kt
of finished nickel in 2022, a 7.5% decline from 2021 due to reduced
stainless-steel production. Finished demand will then grow by a gentle CAGR of
1% to 49kt in 2027.
Growth from stainless-steel will be small, while battery
development will push demand in the next five years. Gigafactories have been
proposed by Italvolt in Sarmagno, and by Stellantis in Termoli. Demand growth
will then slow to a CAGR of 0.5%, taking finished demand to 52kt in 2040.
Italy
is targeting carbon neutrality by 2050. By 2030, total emissions will reduce by
60%, while the market share of renewable energy increases to 30%. An additional
4m EVs and 2m hybrids will drive on Italy’s roads by then. In 2020 Italy
emitted 303.82Mt of carbon from its energy and production activities.

In
Termoli, Amsterdam-headquartered auto manufacturer Stellantis will be
converting its engine plant into the group’s third European battery plant. Engine
production will terminate in 2024, with battery production commissioning in
2026.
Stellantis will source nickel and cobalt sulphate from Alliance
Nickel’s (previously GME Resources) developing NiWest project in Australia. The
manufacturer is aiming to rapidly scale up production, and to have a total
portfolio of 75 EV models, with annual sales reaching 5m by 2030. A hydrogen
fuel cell is currently being developed for light commercial vehicles.
Stellatis
will strive for zero-carbon by 2038, and to reduce emissions by 50% from
2021 to 2030, with renewables fully powering its operations by then. In 2021,
the total carbon footprint of vehicles sold by the company was 136Mt. Of this,
only 1.2% came from Scope 1 and 2 sources. 11% came from upstream operations
including minerals mining, processing, and transportation.
Apart
from battery developments, Italy also hosts Europe’s biggest stainless-steel
plant. The facility, located in Terni, is owned and operated by Acciai Speciali
Terni (AST), with a production capacity of 1,450ktpa of specialty steels. This
includes the austenitic, martensitic and the nickel free ferritic
stainless-steels. The company reuses refractories in its production process to
partially substitute for lime, which reduces total waste produced by 15-20ktpa.