Nmecha helped Germany win the European Under-21s Championship with the only goal of the final against Portugal last month.
But with City looking to offload a number of fringe players this summer as they plan to offset spending on their first-team squad, the striker, 22, looks surplus to requirements, according to reports.
He spent the 2018/19 season on loan at Deepdale from City, scoring four goals in 44 appearances, 19 of which were as a substitute.
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He was a teenager at the time, and it was his first loan spell away from City.
Loans at Wolfsburg – who now look set to complete a deal for him – and Middlesbrough followed, neither of which went well, with Nmecha having spent the season just finished on loan at Vincent Kompany’s Anderlecht.
He scored an impressive 21 goals in 41 games and the Belgians were keen to re-sign him. But Kompany said: “Everyone here is a fan of him. We made him better this season and he made us better. Don’t expect a gift from Manchester City The people at that club are smart.”
Nmecha was the leading marksman at the Under-21s Euros – across both the group stage and knockout phase – and scored his fourth goal in the tournament in the final in Slovenia to secure a 1-0 win.
Red Bull Leipzig were considered frontrunners for his signaturethis summer.
But Bundesliga rivals Wolfsburg are now close to reaching agreement with City over an £11.2million fee according to Daily Mail Online.
The Germany Under-21s international was born in Hamburg but was raised in Manchester.