UBS predicts that by 2025 the amount of nickel going into batteries will be about 700,000 tonnes.
UBS are not the most bullish.
20% of a current 90m new vehicles a year market is a lot of EVs. If you assume 25% don’t use nickel rich batteries that still leaves you with 13.5m EVs each requiring a minimum of 50kg of nickel each. That’s a lot of class 1 nickel.
Base metals on the London Metal Exchange were mostly lower at the close of trading on Friday November 9, with broad price weakness coming amid a fresh surge in the dollar index while investors heed caution over hawkish US-Sino trade relations.
“Base metals are working against the strong dollar and the tightening Fed policy,” SP Angel commodities analyst Sergey Raevskiy told Fastmarkets. “All the focus is on Chinese tariffs and US-China tensions,” he added. Falling 2.7% over the afternoon, the three-month nickel price was the underperformer on the day, despite prices nearing $12,000 per tonne earlier this week. Limiting gains, the onset of further global nickel supply continues to dampen buying appetite, with an expected ramp-up in nickel pig iron from Indonesia reportedly set to the tune of 100,000 tonnes for 2019. Meanwhile, copper also lost support over the afternoon
The global nickel supply deficit for 2019 will narrow to 22,000 tonnes from 143,000 tonnes in 2018, mainly due to the ramp-up in nickel pig iron (NPI) output next year, Xu Aidong, chief analyst of Chinese research organization Antaike said at the Antaike Annual Nickel & Cobalt conference in Xiamen, China, on November 7.
If this scenario is confirmed, the Nickel market is balanced.
The only variable in the NICKEL market is now the EV implementation rate…
It will take some time for the whole EV revolution to get going but once it does the uptake will be fairly rapid. Predicted number of EVs per year.
2018 - 2.05m
2019 - 3.34m
2020 - 5.51m
2021 - 9.09m
2022 - 15.1m
2023 - 24.7m
2024 - 40.8m
2025 - 67.4m
The above assumes an average year on year increase in uptake of 65%. Given what we have seen to date that’s not unreasonable.
You also have to factor into the equation expected increases in demand from the stainless steel sector. At present it is expected demand will increase by 6% in 2019 and 8% in 2020. Stainless steel uses approximately 1.3m tonnes on nickel a year. That means 78,000 tonnes in 2019 and approximately 110,000 additional tonnes in 2020. Increase in demand from the stainless steel sector is likely to outstrip demand from EV’s up until 2021.
The picture is an awful lot more complicated than increasing demand from the stainless steel or EV sectors. Changes in the proportions of metals in batteries, potential changes in the metals themselves, trade wars, laterite -vs- sulphide, resource nationalism. All of these issues conspire to make even the most general of predictions tentative. The one thing you can say with a fair degree of certainty, however, is demand outstripping supply in the nickel market is not an “if” but a “when”.
You may have posted this already but if not its worth a read.
Chinese Nickel Demand to Increase but Build-up in Capacity to Cap Prices
Chinese nickel demand from stainless steel and battery materials producers will continue to rise in near future, although extensive investments in nickel projects will cap higher nickel prices, Fastmarkets learned from Antaike’s Nickel & Cobalt Conference in Xiamen on November 6-8.
Much of the apparent Chinese demand for nickel over the next couple of years will come from the country’s stainless steel sector, which is expected to continue increasing its capacity, delegates at the conference were told.
“Stainless steel is replacing some traditional applications of steel, aluminium and copper,” Liu Fuxing, standing vice president of the stainless steel branch of China’s Special Steel Enterprises Association, said.
“There are policy-driven factors in China, such as infrastructure and countryside development, that are requiring and providing new opportunities for stainless steel,” he added.
Chinese stainless steel production is expected to reach 28 million tonnes in 2018, up 8% from last year, Liu told the delegates.
Although the economic cycle headwinds expected over the next two years will slow down the ramp-up in new stainless steel production in 2019, production growth next year is still expected to be about 6%, according to Liu.
The growth in battery materials production led by expectations of a boom in electric vehicles (EVs) will also drive higher nickel consumption.
“China produced 100,000 tonnes of ternary battery materials in 2017, up 100% from 2016; meanwhile, production is expected to rise about 30% in 2018,” Xu Aidong, chief analyst at Beijing Antaike, said.
As a result, there has been aggressive investment by Chinese producers in new nickel projects, especially in Indonesia, in order to secure the resources for these two areas of growth.
Most recently, Chinese cobalt producer Huayou Cobalt announced in November it is to invest in a joint venture with other four companies to build a laterite ore hydrometallurgy plant producing nickel intermediate products in Morowali, Indonesia.
Another joint venture, comprising Tsingshan Group, GEM, Brunp Recycling, PT Indonesia Morowali Industrial Park (IMIP) and Hanwa Co, announced in October it is to invest $700 million to develop a nickel-cobalt project in Indonesia.
Meanwhile, China’s Jinchuan Group and Indonesian mining company WP & RKA jointly received approval to export 2.2 million tonnes of nickel ore from Indonesia in October 2017.
Nickel prices under pressure
But delegates at the conference were also told that this extensive investment in new nickel projects will keep nickel prices subdued.
The three-month nickel contract on the London Metal Exchange (LME) hit an almost three-and-half-year high of $16,690 per tonne on April 19, but the contract has been largely under pressure since then, dropping to $11,495 per tonne on October 31.
Fastmarkets assessed the nickel sulfate min 21%, max: 22.5%, cobalt 10ppm max, China ex-works price at 25,200-25,600 yuan ($3,639-3,972) per tonne on November 6, compared with 26,000-27,500 yuan per tonne on August 7, the highest level since FastMarkets launched this price assessment in July 2018.
“Optimism over EV battery consumption boosted demand for battery materials, and resulted in relevant price rallies. Lithium was the first to show strong momentum, followed by cobalt, and [this year] witnessed nickel prices rise quickly,” Xu said.
“However, the rising demand and prices have also stimulated investment interest, which will ultimately place hurdles in the way of any future price rally,” she added.
“For nickel, the competition created by all this new capacity will be fierce, so the price is unlikely to rise too much,” Song Quanming, from the Nickel Institute said.
In addition, as acknowledged by a number of market participants at the sideline of the conference, since large-scale EV penetration won’t materialize within the next 3-5 years, it is less likely that there will be any immediate large increase in nickel demand.
“Projections for a big increase in the consumption of nickel as a result of EV development cannot support nickel prices for long at the moment,” a trader at the sideline of the conference said.
“The most solid demand for nickel for the time being will continue to come from the stainless steel sector,” he added.
Concerns over stainless steel oversupply
But China’s stainless steel industry faces its own over-capacity issues, market participants noted, which could undermine a sustainable rise in demand from the sector for nickel.
Chinese stainless steel consumption will reach 23 million tonnes in 2018. While this marks a 15% rise over last year, a surplus of 5 million tonnes of production is still expected this year, Liu warned.
“We need to be cautious in our attitude towards the ramp-up in stainless steel production. Is the demand for stainless steel enough to cover all this new production?” Liu said.
“The same question shall also be raised of the nickel industry,” a delegate said.
This is more of the same, predicting a subdued market for nickel in the near term with supply/demand more or less balanced.
Using your numbers, 67.000.000 electric cars are to be driven by 2025, 50% use NMC / NCA technology (today this technology is 63%) and putting 40kg of nickel per car and for these 50% of market share, we speak of 1,340.000 Tn required
The Nickel market is balanced, and I am talking about Stainless Steel Market, the only variable in the NICKEL market is now the EV implementation rate…
The nickel price does not correspond to this reality…
John Petersen, reply to me and said his opinion : "NMC622 uses about 700 grams of nickel per kWh of battery capacity, so your 40 kg per vehicle number is light. Your market share number for high nickel content batteries should be closer to 80%. You’re absolutely right that nickel pricesdo no reflect expected future demand.
Cobalt is merely the tip of the iceberg. de same exemple "
My guess work is no more accurate than everybody else’s. 15 months ago the pundits didn’t see nickel recovering from $4/lb at the time to climb all the way up to $7.20/lb in 10 months. Nobody predicted that stocks of nickel in the LME would fall from 390,000 tonnes to 218,000 tonnes in 12 months. Predictions are unlikely to be accurate being at best a guess based on either past experience or historical precedent. Unfortunately we have very little precedent to fall back on with nickel when trying to predict what might happen in the future.
The estaimtes I’ve produced on the numbers of EVs being adopted year on year assumes an “S” curve. The one thing that’s difficult to predict is when the “S” curve flattens out as all “S” curves do. There is also a fair degree of uncertainty surrounding any prediction based on only a few years of data. The uptake of EVs only started to gather traction in 2014. That means we have only 4 full years of figures to work with. How things are likely to pan out going forward will be a bit clearer come the end of 2020 when we will have another 3 full years of data to work with.
If year on year adoption rates for EVs doesn’t hit the levels suggested and only works out to be a more modest 45% year on year uoptake where does that leave us? 25m EVs bought in 2025, 35m in 2026, 50m in 2027.
It only delays wholesale adoption by 24 months.
The hard part with this industry is accurately establishing how much nickel is used in the various different types of lithium ion batteries out there. The battery makers are keeping that information secret for obvious reasons. Its also difficult to know exactly the battery type being made, 5:3:2, 6:2:2, 8:1:1. We are also seeing rapid developments in the nickel space in Indonesia with significant ramp ups in NPI production and new HPAL plants that promise to produce nickel suitable for batteries. All in all we are in a very opaque and rapidly evolving environment right now.
VW Charging Up Electric Car Capacity
German car giant Volkswagen is gearing up to handle the production of 50 million electric vehicles, chief executive Herbert Diess has told German trade publication Automobilwoche.
The carmaker’s electric vehicle platform has been “booked” for 50 million cars, Mr Diess was quoted as saying. “We have bought batteries for 50 million vehicles,” he said.
You can get some information here:
She sees nickel and cobalt being the main beneficiaries as solid state technology slowly comes to market: “First generation solid-state batteries likely contain NCA and NMC2 cathodes - therefore, we see upside for both commodities through 2025.”
That’s a very significant comment. Solid state batteries using nickel in their cathodes hasn’t been stated in any article I’ve come across to date so to see it being flagged up by BMO is a first.
I also found this interesting.
“According to BMO data, in the year to end-September, global EV sales rose 67.5% year on year. This has outpaced BMO expectations…”
50m+ EV sales by 2025 doesn’t seem so far-fetched after all.
Ther interesting bit from this interview is 6 minutes 40 seconds in. Jim Lennon gives his view on the likelihood of a split in the market. Lennon’s opinion seems to tie in with what Nornickel hint at in their recent financial report to investors which is there will not be a split in the market.
Do you have The Nornickel report?
Can you send it?