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LME Nickel Stocks

lse:amc

#182

Hi TDT
Yes I get the market softening and the US trade war etc, but the stuff is marching out the gate, yet of late the price seems to be pinned around the mid $5 area for quite a while now.


#183

Bob

It’s a market where all nickel is viewed the same but it’s not the same. It’s a really odd contradictory dynamic. Class 1 nickel is marching out the door of the LME alright and if that were the only story in town price would rise but it’s not. The historically high inventories in the LME, in fact unprecedented levels of stock in the LME, will impact price movements as well. The type of nickel in demand is readily available, the type of nickel that controls price (the stainless steel variety) is readily available. There’s no mechanism in play at the moment to move price up.

Something will have to give but I don’t see that happening until LME stock levels get down to more sensible levels, possibly down as low as sub 100,000 tonnes.

For me the issue at the moment is not Amur but the wider nickel market and the development/uptake of EVs in particular. Once the nickel market gets out of the rut it’s in, prices start to rise and EV uptake starts to make headlines Amur will shine. That’s the game to be watching at the moment IMO.

TDT :sunglasses:


#184

#185

Jan 3 2018

A new report by BMI research says that refined nickel prices will continue to lose steam in the coming months due to increased supply from Indonesia, subdued demand from China and fading overly-optimistic demand expectations from electric vehicle production.

“We have kept our nickel price forecast at $10,000/tonne for 2018 and expect prices to head lower over our forecast period from 2017-2021 as the global nickel market surplus widens,” the firm says.

According to BMI, once investors realize that any significant impact of EV’s on nickel demand is still years away, prices will continue to go down from the current $11,295/tonne following an unexpected rally in the second half of 2017, which took them above $13,000/tonne.

“Further downside pressure on prices will emerge in the short term as the global nickel market shifts into a surplus. On the one hand, we expect stainless steel demand – which accounts for approximately 70% of all nickel consumption – to wane as the Chinese Government shifts policy away from heavy industry,” the business intelligence company predicts.

When it comes to supply, BMI foresees excess as Indonesia floods the market following the end of its ore export ban. To support its analysts’ point, the firm refers to Bloomberg’s data, which show that Indonesian nickel ore production growth averaged 62% y-o-y over the first nine months of 2017.

The market researcher states that it also expects global refined nickel production to increase from 1.89 million tonnes in 2017 to 1.92 million tonnes in 2018. “This uptick in production will be driven by a recovery in Chinese, Russian and Australian production following a contraction for all these major producers over 2017.”

Indonesia, BMI says, will have the fastest refined nickel output growth rates from 2017-2021, increasing its total production from 43 kt in 2017 to 50 kt in 2021, amounting to average annual growth of 9.4%.

The other outperforming major producer will be Australia, which maintains a stable regulatory environment and solid project pipeline, while output in the number one global producer, the Philippines, is supposed to remain muted in the coming months as a result of environmental shutdowns of mines over 2017


#186

I wrote this because it is a way of developing the theme.

I also like to listen opinions from who think differently.


#187

Vale expects ‘completely different’ base metals division by 2020
Vale, the world’s largest producer of iron ore and nickel, believes that its base metals division will be completely different by 2020, senior executives said on Thursday October 25 during a third-quarter earnings call.

One of the principal objectives, they said, was to improve nickel operations by reducing costs and improving productivity.

VNC is the company’s nickel operation in the Melanesian country of New Caledonia, north-east of Australia. It is already undergoing a complete restructuring process, chief financial officer Luciano Siani said.

There will be further news regarding this asset soon, he added, but capacity and cost improvements must be made first.

Vale was previously willing to sell or even close VNC because of output instabilities and accumulated losses, but has now decided to revamp it before taking any further action.

The plant has capacity for 60,000 tonnes per year of nickel but output in January-September 2018 was equivalent to a run rate of only 32,270 tpy.

“This is what we’re doing before deciding whether to keep VNC in our portfolio,” Siani added.

This transformation was being done under the guidance of Eduardo Bartolomeo, who was brought back to Vale this year by chief executive officer Fabio Schvartsman to lead base metals operations, after six years pursuing other opportunities.

Bartolomeo said during the earnings call that while the changes will take some time, he expected to be leading a “brand new” division by 2020.

“We also have to adapt ourselves to the new size of our operations, which has eliminated some refineries,” Bartolomeo said. “If you think about 60,000 tonnes per year [of nickel produced by VNC] and a price of $18,000-20,000 per tonne in 2020, you will understand the opportunities.”

The benchmark three-month price for nickel on the London Metal Exchange was $12,210-12,220 per tonne on October 25. This was down by 1.41% from $12,385-12,400 per tonne on Wednesday.

Bartolomeo believed that Vale will be able to achieve its nameplate capacity for 310,000 tpy of nickel by 2021-22, but this will depend on market fundamentals.

Vale’s executives also commented during the call on Salobo 3, a new expansion to its copper mine located in Brazil.

As indicated by its name, this will be the third concentration unit at the plant. It will have capacity for 50,000 tpy for the first five years, 42,000 tpy in ten years’ time and 33,000 tpy over its whole life cycle. This means that Salobo’s lifespan will be reduced and that it will be depleted in 2052, from a previous expectation of end-of-life in 2067.

The expansion will start-up in the first half of 2022, and the investment required has been estimated at $1.1 billion.

“[Salobo 3] is a twin plant in comparison to the other two,” Bartolomeo said. “We expect a slight increase in the cash cost of Salobo because of [the early] depletion, but this should be close to what we’re seeing [for the whole complex] right now.”


#188

Nuno

Sometimes people don’t pick up on the relevant parts of links posted on these BB so I thought I’d extract and post here the below section from the Australian Mining article you posted.

The stand out bit:-

"stainless steel production was a “huge driver” of the metal’s consumption and still dominated the market (with global growth of roughly 8 per cent per year)._"

The EV market will be the main driver of increased nickel demand in the long term but it’s really stainless steel that’s going to move the market (either way) in the immediate to near term and that’s more prone to near term political and economic developments. In short buckle up for a bumpy ride over the short term. Long term prospects for nickel, however, look fine.

TDT :sunglasses:

Speaking at the Australian Nickel Conference in Perth yesterday, Poseidon Nickel COO Michael Rodriguez said nickel’s use in stainless steel production was a “huge driver” of the metal’s consumption and still dominated the market **(with global growth of roughly 8 per cent per year).**

However, he believes the industry can also expect shortages as nickel becomes increasingly used in electric vehicle (EV) battery production.

“Over the next seven to 10 years, the battery market will be dominated by lithium ion batteries for cars — with batteries comprising about 40kg of nickel per standard EV produced, such as a Tesla S model,” he said.


#189

TDT

I agree with you

October 18, 2017 | Colin Jacoby

Demand for electric car batteries will have a major impact on the beleaguered nickel industry — but it won’t happen overnight or even next year, a commodities expert says.

Batteries for electric vehicles were a “slow-burner” but would have a significant impact on nickel in the 2020s, Macquarie Capital senior commodities consultant Jim Lennon told delegates at the Paydirt Nickel Conference yesterday.

Nickel is mainly used in alloys such as stainless steel. It is also used to plate metals because it resists corrosion.

While stainless steel still dominates nickel demand, Mr Lennon said the battery market could eventually be a key driver for nickel.

However it was virtually impossible to forecast nickel demand for batteries given the secrecy of the market.

“[It’s] essentially impossible and always changing,” he said.

“No-one knows for sure and it may change dramatically, especially on a two to three-year time frame. Those who know more are not telling.”

Despite this, Mr Lennon said batteries could account for 13 to 15 per cent of the nickel market by 2025.

Nickel use in batteries could double from below 4 per cent of demand in 2016 to 9 per cent by 2022, averaging over 20 per cent a year growth.

The nickel price has been volatile this year, trading in a 39 per cent range from a low of $8710 per tonne in June to $12,140 in September.

Earlier in the year, the nickel price was under pressure because of a rise in nickel supplies in the Philippines and Indonesia, the world’s key nickel exporters.

However, China’s appetite for stainless steel has witnessed an increase in nickel demand, driving the metal’s price to just shy of $12,000.

Looking ahead, Mr Lennon tipped longer-run nickel prices in the $15,000-20,000 range as nickel inventories dry up and new investment is required.


#190

NATIXIS RESEARCH 26 oct 2018

In the YTD, Nickel has had the smallest fall out of the base metals complex, down just 2% at the end of September. However, in June, the metal was up 23% YTD at $15,569/t. This shows the heavy toll darkening macroeconomic sentiment has inflicted.
The rising price in H1 was supported by a significant fall in nickel LME stocks throughout the course of the year. However, even though this fall was sustained into Q3, it was not sufficient to overcome the damage inflicted by the ongoing trade war. Downside also resulted from the market becoming aware of high-grade nickel being stockpiled in private stores rather than consumed.
This stockpiling of high-grade nickel is in anticipation of a significant shortage of nickel sulphate (the high-grade form of nickel most suited for use in batteries) in the future. The adoption of electric vehicles (EV) over the coming years is due to reshape the nickel market. Our base case predicts a 9% (174 kt) jump in nickel sulphate demand by 2030 due to EVs, although this could be significantly higher (high case estimate at 53.5%, or 1.04 Mt additional demand by 2030). This is leading to early stockpiling as there is a consensus that this demand will drive up prices for high-grade nickel in the coming years. This is in contrast to traditional nickel demand, which has been driven by the stainless steel market and is due to remain relatively flat in the coming years.
Due to falling inventories, Chinese stimulus and demand growth from electric vehicles, we see price trending upwards through 2019 (average $13,800/t) and 2020 (average $15,100/t).
However, the market between high-grade nickel sulphate and low-grade nickel pig iron (NPI) is heading in different directions. NPI, a low cost source of nickel suitable for production of stainless steel, has become the dominant source of nickel in recent years, and is due to see further increases in supply as production grows in Indonesia and the Philippines out to 2020. This was the main cause of a falling nickel price between 2011 and 2016.
However, for high-grade nickel, this has had an adverse effect on production. The lower price has meant producers have not been willing to commit to high-grade projects which are far more CAPEX intensive than their NPI counterparts. Thus, supply has fallen by 7% between 2011 and 2017, compared to growth of 15% for low-grade nickel.
The same story is set to continue going forward, with grade 1 nickel supply flat to 2020, while low-grade nickel production will increase 25% in the same period. This is despite growth in demand for nickel being strong for grade 1 but flat for grade 2. Thus, the market will have a deficit in grade 1 but a surplus in grade 2 going forward, pushing prices in opposite directions.
As such, the current pricing structure on the LME is actively working against the evolution of an efficient and reliable nickel
sulphate supply chain that can feed future battery demand. Going forward, it seems likely that the LME will change its pricing structure, with a separate nickel sulfate contract due to the vastly different nature of the markets for low and high-grade nickel.
In the meantime, nickel investors must decide whether to invest now in class 1 deposits at high capital costs or wait for the EV sector to mature and price to rise.


#191

https://www.crugroup.com/knowledge-and-insights/insights/2018/indonesia-sets-sights-on-increased-nickel-capacity-to-meet-battery-sector-demand/

22 Out 2018

Up until now the focus for new capacity in Indonesia has been on building nickel pig iron capacity predominantly through the Rotary Kiln Electric Furnace (RKEF) route.
This is a product that is geared for the stainless industry and we have seen several NPI projects come on stream since 2014. However, with the expected strong demand growth for nickel from the battery sector a number of companies are now considering building High-Pressure Acid Leaching (HPAL) facilities in Indonesia. The new HPAL facilities considered in Indonesia are mooted to have lower capital costs than what we have seen in the past, thus challenging the view that nickel prices would need to be above at least $18,000/t to incentivise investment in new class 1 capacity.

CRU understands that at least four HPAL projects are being considered by various parties in Indonesia.

Sumitomo Metal Mining and Vale are together working on a feasibility study to build a 40ktpy HPAL operation in Pomalaa, Southeast Sulawesi.
PT Halmahera Persada Lygen, a joint venture between Harita group and Ningbo Lygend investment, plan to build a HPAL plant in Obi Island. The plant will have a MHP gross capacity of 240ktpy, which is equal to about 37ktpy nickel and 5kt cobalt. They plan to finish construction by 2020.
Tsingshan is understood to be looking to build a HPAL operation in Weda Bay.
QMB New Energy Materials plans to build a HPAL facility to produce at least 50ktpy of nickel and 4,000 tonnes per year of cobalt (both contained) at Tsingshan’s industrial park in Morowali on the island of Sulawesi.
Of all the projects the PT. QMB New Energy Materials project seems most likely to come on-stream first, but this is likely to open the door to additional capacity if it proves to be successful. The PT. QMB New Energy Materials project is a joint venture involving Xinzhang international holding (subsidiary of Tsingshan) 21%, GEM 36%, Brunp (CATL) 25%, PT. Indonesia Morowali Industrial Park 10% and Hanwa 8%. Nickel intermediates from the operation will be directed to produce battery-grade nickel sulphate (150kt) and hydroxide intermediates (50kt) and cobalt sulphate (20kt) for both captive use and for sale to the third-party market (all numbers are on a gross basis).

The investments by Tsingshan are primarily geared to meet increasing demand for nickel sulphate from the battery sector on the back of increasing penetration of electric vehicles. Given that there are limited economically attractive sulphide deposits that can be developed, the market will need to rely on the hydrometallurgical route to provide new class 1 nickel units. But at what incentive price?

If we consider capital costs of recent greenfield HPAL projects, producing a nickel intermediate, that have been commissioned such as Taganito and Ramu then the average capex is around $62,000/t of nickel. To incentive these projects we calculate that you need nickel prices above $18,000/t.

The market’s attention has been caught by the reported capital costs of the PT. QMB New Energy Materials of $700M, which equates to only $14,000/t of installed nickel capacity, considerably lower than the recent wave of projects that have been commissioned. The project will benefit from existing infrastructure at Morowali, but it is still difficult to fully explain the significantly lower capex. In addition, as the chart above shows many of the projects have suffered from cost overruns.

Moreover, the announcement by GEM comes at the same time as the disclosure by Highlands Pacific that Metallurgical Corporation of China (MCC), the majority partner in the Ramu operation in Papua New Guinea is looking to expand the facility at a cost of around $1.5bn. CRU understands the expansion will raise the plant’s nameplate capacity by 34ktpy to 66.6ktpy. The capital cost equates to $44,000/t of nickel.

In the accompanying chart we show the incentive price for a HPAL operation at different capex assumptions. Assuming the capex is 35% lower or around $44,000/t nickel the incentive price comes in at below $16,000/t. Of course many of this feed is likely to find its way into the production of nickel sulphate. Given the premium for nickel sulphate currently in the market then potentially the incentive price could be lower. In addition, the recent high cobalt price is also a factor in this exercise. Our consulting group has undertaken extensive work in this area.


Another interesting development is the prospect of NPI being channelled into nickel sulphate production. Tsingshan and Huayou, China’s largest cobalt smelter, have started work on building four RKEF lines in Weda Bay. The plan is for the NPI to be processed into nickel matte and then nickel sulphate. We believe the economics of this route are potentially less favourable than the HPAL process, but it does give optionality between producing NPI or Nickel sulphate.

Tsingshan also has separate agreements with Eramet and Zhenshi to build four RKEF lines in Weda bay. Each line has a gross capacity of 30ktpy. CRU understands the project with Eramet will be built outside the Weda Bay industrial park.

The market will watch closely if the planned HPAL projects in Indonesia can be delivered at a lower capex and avoid problems which have plagued the commissioning of other projects. Nonetheless, these developments have increased the uncertainty surrounding the long-term view on nickel prices.


#192

Nuno

There has always been a lingering doubt in my mind that the Chinese would find a way to process nickel laterite into nickel sulphate economically. This is what they did during the nickel boom 20 years ago when they developed and commercialised nickel pig iron. Amur really needs to get the finger out before the Chinese spoil the party or battery chemistries change.

TDT :sunglasses:


#193

It is what seems to be happening, this Chinese investment in indonesia was to mistrust.

At the moment, I think Natixis targets make more sense, is a very good price :slight_smile:


#194

This can bring high-priced producers out or not even enter the market, which will positively affect the Nickel´s price.

I do not like it, but the world will be more Chinese, Asian.

I like it, the world will be more electric and less oil


#195

https://www.bloomberg.com/news/articles/2018-10-29/battery-metal-bulls-fear-china-s-great-disrupter-to-curb-nickel

This decade, Tsingshan was again instrumental in pegging back prices by setting up low-cost nickel pig-iron plants near to ore deposits in Indonesia. Now, it’s looking to use High Pressure Acid Leaching technology in a $700 million project that would cost $14,000 per ton of nickel capacity. That’s less than a quarter of the cost of recent HPAL projects, according to consultancy CRU Group.

Understandably, that’s causing nervousness among nickel bulls.

“It’s the third wave of disappointment for nickel,” David Wilson, a metals strategist at Freepoint Commodities, said by phone from London. “If it works, they’ll do it quicker and cheaper than anyone expects."


#196

10,apr 2018

Nickel price was at 13,000 USD/ton

“Jim Lennon, managing director of Red Door Research, also points out that, although the nickel market has been bullish, prices are not particularly high at present. He stresses the importance of mining costs as well: “If you look at the cost curve, unlike copper and zinc prices, which are well above the nominal costs of their production, nickel prices are lying at the top end of its curve – meaning that some mines are still uneconomical.””

Now Nickel is at 11,820 more high cost producers must go out of the market

“Market participants told Yang that around $13,000 per tonne for nickel on the LME is not enough to attract more investment in nickel mines and production. Physical traders are expecting the market to be extremely tight in three years’ time, when battery demand is expected to really start kicking in, owing to the lack of supply entering the market. Such tightness could lead to industrial consumers seeking longer-term contracts – similar to moves by BMW looking to secure a ten-year supply of cobalt and lithium.”


#197

Nickel draw down from the LME has slowed down in October. Draw down for the month is likely to in the region of 9,000 to 9,500 tonnes. Previous months in 2018 have mistly been 15,000+ tonnes.

Nickel used in EV batteries for the whole of 2018 is likely to be in the region of 35,000 tonnes. In 2019 I anticipate EVs requiring 50,000 tonnes, 2020 105,000 tonnes and in 2021 175,000 tonnes. After 2021 it starts to really take off.

TDT :sunglasses:


#198

https://www.fitchsolutions.com/corporates/metals-mining/wider-environmental-risks-pose-downside-ev-boom-25-10-2018


#199

This is the important bit for Amur.

TDT :flushed:

These sustainability concerns have already driven a change in the composition of battery cathodes being used by battery manufacturers, who are currently looking at ways of increasing nickel content at the expense of cobalt in their cathodes. Moving forward, we believe these concerns will be the key catalyst behind the broader shift from NMC 622 cathodes to the more nickel-heavy NMC 811 cathodes (see ‘EV Battery Market To Bolster Demand For Metals’, 24 October 2018).


#200

#201

Nuno

EVs are likely to require 50,000 tonnes of class 1 nickel in 2019, 100,000 tonnes in 2020, 160,000 tonnes in 2021, 260,000 tonnes in 2022, 420,000 tonnes in 2023. Everything would have to go in Tsingshan’s favour to keep up with that sort of growth in demand.

No matter what Tsingshan has developed at pilot plant level building and operating a full sized plant is an entirely diferent proposition. The Chinese are good but they’re not infallible.

TDT :sunglasses: