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LME Nickel Stocks

lse:amc

#362

Source TD securities

“Despite the dreadful performance over the past six months, nickel remains a darling in the eyes of the press and among many analysts as deficits and electric vehicle demand expectations keep the talk focused sharply on pending supply shortages. But, speculative investors across the LME, systematic strategies and Chinese hedge funds have all firmly taken the other side of that bet, driving prices some $5000/t off the June highs, and showing
little sign of recovery as the majority of its base metal peers have.
Indeed, as trade war worries between the US-China kicked off again, base metals including nickel promptly sold off. But, in recent months, headlines of constructive talks between Trump and Xi have prompted traders to cover shorts in metals with stronger underlying fundamentals such as copper and zinc, but this was not the case in nickel. Speculative money has remained firmly against nickel and TD Securities tends to see the nickel story in
the same light, as we had previously recommended shorting the metal in June at prices north of $15,000/t.
For now, we remain bearish and think that further downside is possible as the trade wars concerns linger, but do not see an asymmetry in risks that warrants putting on a short position at current levels.
On the fundamental side, LME and SHFE stockpiles have certainly been drawing down, but there still remains a sizeable portion of inventories, especially taking into account the estimated 1m tonnes of off-exchange stockpiles.
Meanwhile, despite the fact that a portion of export permits were temporarily revoked due to a failure to meet smelting capacity requirements, Indonesian ore exports have been steadily increasing and we expect will continue to grow as permits allow for tonnage similar to pre-ban levels. In addition, after a rainy season, and after restrictions on previously banned mines have been lifted, ore shipments should also increase out of the Philippines. These sources of near-term supply will very likely be met with temporarily lower demand as trade war and global growth concerns, along with slumping stainless steel prices weigh. As such we would not be surprised to see nickel trade as low as $10,000/t in the early months of the year if trade sentiment worsens.
In the latter half of the year though we do expect a trade deal to be struck and base metals to recover, which should also see nickel prices move higher as well. But, unlike the hurdles that some other industrial metals might face, nickel demand also faces longer term challenges which could see forecasts move sustainably lower. Indeed, longer term bullish outlooks are focused on the need for nickel as an input for electric vehicle batteries. This outlook is built on already shaky ground as battery technology could very well change before that demand actually materializes, but an even bigger risk looms if Tsingshan is able to successfully and economically produce HPAL nickel”


#363

65% of the 2.2m tonne per year nickel market goes into making stainless steel. The production of stainless steel is expected to see year on year growth between now and 2025 (notwithstanding the current trade war) of 4% CAGR. The figure quoted, 4%, is conservative.

That means from 2018 where nickel demand for stainless steel (65% of 2.2m tonnes) is 1.43m tonnes we will see the following.

2018 – 1,430,000
2019 – 1,487,200
2020 – 1,546,688
2021 – 1,608,555
2022 – 1,672,897
2023 – 1,739,813
2024 – 1,809,405
2025 – 1,881,781

From stainless steel alone we will see an increase in demand for nickel of somewhere in the region of 451,781 tonnes per year by 2025.

Even if the battery chemistry for EVs changes and Tsingshan is successful with HPAL there will still be a significant increase in demand for nickel going forward.

TDT :sunglasses:


#364

TDT

Did you read TD securities report?

‘ estimated 1m tonnes of off-exchange stockpiles’

Now are 1 m tones!!! In September they were talking about 400,000 tones…
Unbelievable


#365

Nuno

I think that figure is very much a guess. There is certainly an awful lot of off exchange stock out there but I’d be surprise if it came to anywhere near 1m tonnes.

TDT :sunglasses:


#366

About Manganese


#367

Source Nornickel/ICBC Standard Bank

“Recently, the stock drawdown has exceeded the supply deficit. Indeed, the stocks dynamics are a quasifundamental that have to be looked at with a note of caution. We believe that around 30% of stocks that had left the exchange warehouses did not go into immediate consumption but ended up relocated to non-LME warehouses for strategic stockpiling by financial players and consumers filling up the expanding pipeline.”


#368

Global investors managing $32tn issued a stark warning to governments at the UN climate summit on Monday, demanding urgent cuts in carbon emissions and the phasing out of all coal burning. Without these, the world faces a financial crash several times worse than the 2008 crisis, they said.

The investors include some of the world’s biggest pension funds, insurers and asset managers and marks the largest such intervention to date. They say fossil fuel subsidies must end and substantial taxes on carbon be introduced.

Even if there is 1m tonnes, which I doubt, it will be used.

When they say:-

“We believe that around 30% of stocks that had left the exchange warehouses did not go into immediate consumption but ended up relocated to non-LME warehouses…”

Over what period of time? If they are talking about 2018 then 30% of the draw down so far is only about 45,000 tonnes. If they are talking about 2017, likewise, about 45,000 to 50,000 tonnes.

I think this is a non story.

TDT :sunglasses:


#369

#370

If the coking coal used by china to produce NPI got lumped with ‘substantial taxes’ it would turn things back our way?


#371

“Cobalt is by far the priciest element needed for the production of electric vehicle battery packs, currently, lithium-ion batteries are using nickel-cobalt-manganese cathodes which have a chemical composition of 1 part nickel, 1 part cobalt, and 1 part manganese. GM battery supplier, LG Chem is working to debut a new battery chemistry that uses 8 parts nickel, to 1 part cobalt and manganese which could reduce battery cost by nearly 30 percent.”


#372

I think this might have been posted already but in case it hasn’t here it is again.

Daimler is buying over $20 billion in battery cells to support electric vehicle plans

TDT :sunglasses:


#373

More nickel to India

Infrastructure collapses

Collapse of Railway structures have led to disruptions and avoidable loss of life. The enquiry report made on Andheri bridge collapse has established that corrosion of the structure as the main cause of failure. The tragic pedestrian bridge collapse at the Andheri station, which injured five people and killed one, occurred barely nine months after a railway bridge stampede causing 23 deaths at Elphinstone Road in Mumbai.

The ISSDA believes such collapses could be avoided by adopting stainless steel for longterm social infrastructure, especially pedestrian bridges and overpasses. The Indian Stainless Steel Development Association (ISSDA), the country’s stainless steel body, has reiterated the importance of using stainless steel for social infrastructures such as bridges, overpasses etc. to drastically minimise loss of life and finances.

“Considering that 50% of the 120,000 railway bridges in India are over 100 years old, it is the need of the hour to deploy the best-suited material - stainless steel - to reduce casualties significantly. Moreover, stainless steel has twice the life cycle compared to carbon steel”, said the President of ISSDA, Mr. KK Pahuja.


#374

https://www.metalbulletin.com/Article/3848387/Search-results/2019-PREVIEW-NPI-to-extend-its-dominant-role-in-nickel-supply.html

2019 PREVIEW: NPI to extend its dominant role in nickel supply
Nickel pig iron (NPI) is set to extend its dominant role in nickel supply in 2019, with output in both China and Indonesia rising further as a number of key projects come online.

Increased NPI output in Indonesia is expected to squeeze global nickel supply to 22,000 tonnes in 2019 from 143,000 tonnes in 2018, Xu Aidong, chief analyst at Chinese research organization Antaike, said at the Antaike Annual Nickel & Cobalt conference in Xiamen, China, on November 7.

Indonesian NPI output will rise to 390,000 tonnes of nickel in metal next year, compared with 140,000 tonnes in 2018. Production in China is expected to rise by 40,000 tonnes year-on-year to 480,000 tonnes in 2019, according to Chinese information provider SMM.

The nickel supply structure has been going through a major change since 2015, with NPI expected to replace refined nickel as the main contributor to supply by 2020. In 2015, refined nickel contributed 57% to supply, while NPI is expected to contribute 55% of the supply by 2020. In 2018, 51% of global nickel supply originated from NPI, Liqing Zhang, senior analyst from Tsingwoods Holdings, said in a presentation on November 30.

New NPI projects
Tsingshan Group currently produces around 170,000 tonnes per year (tpy) of nickel in metal in Indonesia, from its three NPI output phases which have 20 Rotary Kiln Electrical Furnaces (RKEF) lines.

The group’s fourth NPI production phase will come on stream in early 2019, taking its total NPI output to 200,000-210,000 tpy of nickel in metal.

In addition, Tsingshan’s Weda Bay project – with 117,000 tpy of nickel-in-metal capacity – is expected to come into operation in 2020, according to Zhang.

Weda Bay has eight 33,000 KVA RKEF lines jointly owned by Tsingshan and Zhenshi Eastern Special Steel Co, and another four 33,000 KVA RKEF lines co-owned by Eramet and Tsingshan.

Indonesia’s PT Virtue Dragon Nickel Industry’s (VDNI) NPI output is also expected to climb to 100,000-110,000 tonnes of nickel in metal in 2019 from 40,000 tonnes, according to SMM.

Seven out of VDNI’s 15 RKEF lines in the first phase are in production, and the remainder will come into operation in 2019. VDNI also plans to build a further 30 RKEF lines in the future.

China’s Jinchuan Group and Indonesian mining company WP & RKA built an NPI smelter with four RKEF lines in Indonesia in May this year. The smelter is expected to produce 30,000 tpy of nickel in metal when it comes into operation next year.

In China, Shandong Xinhai Technology, the country’s largest NPI producer, has added eight RKEF lines with a design capacity of 120,000 tpy of nickel in metal.

One of those lines is in operation so far, according to market participants, and the rest are expected to come into operation gradually in 2019.

Fastmarkets assessed the Chinese yuan NPI spot price, on-delivery, at 980-1,000 yuan ($141-144) per tonne on December 4, down from 990-1,010 yuan per tonne the previous week, due to abundant downstream supply and the decline in the London Metal Exchange nickel price.

EV bodes well for nickel outlook, more refined nickel to be used in sulfate-making
By 2021, 8% of global nickel supply will be consumed by the electric vehicle (EV) sector, compared with less than 4% in 2018. The stainless steel sector will still be the largest consumer, accounting for 77% of global nickel usage, according to Antaike’s Xu.

Vale predicts that EV production will increase to 14 million units by 2025 from 1.8 million units in 2018, requiring more than 500,000 tonnes of additional high-quality nickel in the market until 2025, Vale’s chief executive officer, Fabio Schvartsman, said on Tuesday December 4.

“By the end of this year, total sales of Chinese EV vehicles could reach 1.18 million units, and the sales target of 2 million new electric vehicles by 2020 can be achieved,” Jianhua Shi, deputy secretary of the China Association of Automobile Manufacturers, said at APEC New Energy Annual Conference on December 6.

Surging demand from the EV sector has driven lithium-ion battery development in recent years.

Lithium-ion nickel-cobalt-manganese (NCM) and nickel-cobalt-aluminium (NCA) are the two dominant batteries in the EV market. More recently, a shift towards batteries being increasingly nickel-weighted has been evident.

Nickel sulfate – a key material for NCM and NCA batteries – is largely produced and consumed in China. For 2018, nickel sulfate output is estimated at 450,000-500,000 tonnes in China, and around 700,000 tonnes globally, according to Xu.

Chinese nickel sulfate production is expected to ramp up in response to the growth in EV production next year and will reach 520,000 tonnes in 2019, according to SMM.

In 2018, 28% of feedstocks for nickel sulfate produced in China came from refined nickel, including nickel briquettes and nickel powder, compared with just 4% in 2017, according to SMM.

Moreover, the proportion of refined nickel used in sulfate making is expected to increase in China as an immediate expansion in output of another key feedstock – nickel intermediate products – is unlikely despite several new high pressure acid leaching (HPAL) projects being announced this year. HPAL is used in the production of nickel intermediates.

In October, Huayou Cobalt announced plans for a laterite ore hydrometallurgy project producing nickel intermediate products in Morowali, Indonesia. The project will have capacity to produce 60,000 tpy of nickel in metal.

In late September, a joint venture comprising Tsingshan Group, GEM, Brunp Recycling, PT Indonesia Morowali Industrial Park (IMIP) and Hanwa Co, announced it would invest in a nickel-cobalt project, also in Morowali, Indonesia.

The project has target production of 50,000 tpy of nickel and 4,000 tpy of cobalt. It will be able to produce 50,000 tpy of nickel hydroxide intermediates, 150,000 tpy of battery-grade nickel sulfate, and 20,000 tpy of battery-grade cobalt sulfate, according to GEM.

But the projected production timeframes for many of these new HPAL projects are likely to be pushed back and their development costs are liable to increase, Fastmarkets has learned.

Fastmarkets assessed the price for nickel sulfate, China ex-works, at 24,200-24,700 yuan ($3,535-3,608) per tonne on Tuesday December 4, unchanged from November 27.


#375

Macquarie downgrades nickel and alumina price estimates and upgrades coal. The broker makes the most significant changes to nickel, with reductions of -20% and -18% for 2019 and 2020 forecast, respectively. This is because of increased Indonesian nickel pig iron supply and softening demand growth. Alumina forecasts are reduced -17% for 2019 because of the easing of potential supply shocks.

UBS also " suspects the investment in Indonesian supply from Chinese battery/nickel producers may be paring back some of the bullish long-term price estimates for nickel. The broker cuts its nickel price estimates by -6% for FY19 and -1% for FY20. Gold and copper price forecasts are also reduced."


#376

In jan 2018 Macquaire nickel prices forecast was:
2019 13.825 with a reduction of 20% is 11.060
2020 15.000 with a reduction of 18% is 12.300
2021 16.000
2022 17.500

Well, is not far from the world bank`s forecast 2025 15.000


#377

Chinese automobile sales fell 14% to 2.55M units in November to mark the fifth month in a row of declining volume in the region. Total vehicle sales are likely to drop around 3% for the year in what would be the first annual decline for the market since 1990.

Passenger car sales were down 16% during November and are off 2.8% YTD through November 30.

EV sales continue to show improvement with increased support from Beijing. Electric car sales are up 68% YTD to 1.03M for the first 11 months of the year.

Source: Chinese Association of Automobile Manufacturers


#378

LME nickel stocks up by 852 tonnes today. A foretaste of things to come I suspect.

TDT :sunglasses:


#379

TDT

Where did you see the stocks?

Can you send the link, please.


#380

Drop me an e-mail at:-

trickydickytwo@gmail.com

TDT :sunglasses:


#381

TDT

As I already said there are a lot of miners , who need to see the price of nickel rise to be economically sustainable

"Horizonte Minerals (TSX:HZM,ASX:HZM) has unearthed compelling economic results from an assessment of a second stage expansion at its planned Araguaia nickel project located in Brazil, the company announced on Wednesday (December 12).

The report for the second stage estimates post-tax net present value (NPV) of US$741-million and internal rate of return (IRR) of 23.8 percent using the base case nickel price forecast of US$14,000 per tonne. The company noted that using the consensus mid-term nickel price of US$16,800 per tonne, the after-tax NPV for the stage 2 option would increase to US$1.26-billion and the IRR to 31.8 percent."