Or you could base your expectations on the World Bank’s forecasts!
Ask ten different experts the same question and you will get ten different answers. I think the best thing you can do is look at price levels relative to LME stocks for a rough idea of where the nickel price is likely to go if stocks continue falling. This approach doesn’t give you much help in predicting what stocks in the LME will be 6, 12, 18, 24 months from now, for that you will have to look elsewhere.
As for solid state batteries Renault Nissan Mitsubishi had this to say:-
“There are many challenges, but we are making very good progress with an aim of getting it to market before 2030, and by 2025 if possible.”
Industry experts expect the next generation of battery to be at least 10 years away so the above comment ties in with that.
The big unknown is the battery chemistry. Given nickel’s properties I think it highly unlikely, although not impossible, that nickel will not be in the new solid state batteries being developed. A lot of the work being done right now is with the express intention of replacing the electrolyte (lithium) in these batteries. Nickel is an essential part of the cathode and I haven’t seen anything to date that suggests there’s a new nickel free cathode on the horizon just waiting to be adopted. If you know otherwise, please let me know.
The big problem is everybody is keeping what they’re doing under wraps for understandable reasons. It will all come out eventually.
TDT, thank you for your opinions, they are very similar to mine. Anyway we are exchanging sources of information and thank you very much.
Batteries could spark a fresh nickel boom, and perhaps this time there will not be a bust after the boom.
But seasoned market observers are already ringing a warning bell that the nickel sector is getting ahead of itself. While there is a big new market developing for nickel it’s not here yet and might takes decades to fully develop.
Investment bank Morgan Stanley last week described nickel as a “runaway” metal with “fundamental downside risk, but with the market firmly focused on the future”.
Part of the Morgan Stanley warning thesis is that speculators have been soaking up spare nickel ahead of the forecast battery boom. This buying spree has shrunk stockpiles of warehoused nickel, driving the inventory held by the London Metals Exchange down from 460,000 tonnes three years ago to 280,000 tonnes, a low number which represents just 14 per cent of annual demand.
“The sharp fall in exchange inventories on both the Shanghai and London metal exchanges looks to be partly driven by hoarding than demand,” Morgan Stanley said.
Whatever the true state of the nickel market one thing is certain. The 75 per cent rise in the price over the past 10 months from less than $US4/lb to more than $US7/lb will trigger a supply response with mothballed mines coming back on line, and low-grade ore exporters in the Philippines and Indonesia cranking up production.
And that’s the $64 million question – how quickly can supply reach the market versus how quickly will demand develop for electric vehicles?
We know demand for nickel is going to increase going forward. Demand for stainless steel for example is predicted to increase year on year by 4% between now and 2025. It’s demand for nickel to satisfy the emerging EV market, however, that’s likely to have the biggest impact.
I presume you are familiar with Tony Seba’s work on disruptive technologies? If not this 60 minute presentation is an essential video to watch.
If EVs follow the path predicted by Seba we are at the start of a very rapid and significant disruption in the transport sector. Most industry pundits are predicting somewhere in the region of 25m EVs being bought worldwide by 2025. I think this guesstimate is far too low.
Take a look at the attached spreadsheet.
Go to the bottom where you will see a load of figures in red. In the middle of the FIRST table you will see a column in black with the title ACTUAL. These figures represent the actual number of EV’s bought worldwide in the years 2014 to 2017. If you take 2014 and assume year on year growth of 45% up to 65%, figures in red to the left of the ACTUAL column, you can see what the average uptake would have been for various percentages. The actual year on year figure is just over 56% growth. If you then look at the figures to the right assuming 45% to 75% year on year growth from the actual number of EVs sold worldwide in 2017 you get some idea of where this all might go.
At present I am expecting the number of EVs sold by the end of 2018 to be somewhere between 1.95m and 2.0m. In 2017 the number of EVs sold worldwide totalled 1,227,177. If 2018 reaches these levels, then we will have seen an increase from 2017 to 2018 of somewhere in the region of 60%.
Current industry predictions of 25m new EVs being sold worldwide by 2025 is an average year on year growth rate of 45% from 2017. The year on year average up to 2017 is just over 56%. This year we are likely to average 60%. At an average of 60% from 2017 it would result in a figure of 52.5m new EVs sold in the year 2025. The below link gives some idea of what that might look like in a graph.
What does this mean for nickel? With Chinese car companies adopting NMC batteries to maintain State subsidies I think it reasonable to assume a minimum of 58% of all EVs using nickel rich chemistry by 2025. (see page 2 of below link).
If you assume 50kg of nickel per vehicle and 58% of 52.5m you end up with and additional nickel requirement in 2025 alone of just over 1.5m tonnes. You can play with the figures whichever way you like to establish where you think this might go but the evidence to date looks pretty compelling. This probably helps explain why class 1 nickel is flying out the door at the LME right now.
The one thing you need to keep in mind is potential future developments in the battery sector. There will be better and cheaper batteries at some point but the evidence, once again, doesn’t suggest that we will be seeing them anytime soon.
The other way to try and get a handle on how quickly this is all likely to ramp up is to keep an eye on the number and size of battery factories being built.
“Assuming 100% of output was to be NMC532, 90GWh would require around 100kt of cathode, containing 40kt nickel, 22kt cobalt, 16kt manganese and 50kt lithium (carbonate equivalent), and 90kt of anode materials which could be 100% graphite.”
The industry seems to be pretty open about the planned increase in new battery factories and the proposed GWh capacity of these factories. Keep an eye on developments in this sector and it will give you some idea of the likely future demand for nickel.
If you need convincing any further of how quickly this whole industry is likely to develop then consider this.
“If producing at capacity, LG Chem’s LIB output and raw material consumption would be greater than the entire LIB market in 2015.”
That says it all in my opinion. All we need to see now is Amur’s PFS.
Interesting times ahead.
Another bizarre start to the week. The price of nickel falls off a cliff, again, currently down over 15 cents at $5,56/lb. yet LME stocks have dropped another 1,380 tonnes. Nickel stocks in the LME now standing at 232,212 tonnes.
The comment in one of Nuno’s posts:-
“The sharp fall in exchange inventories on both the Shanghai and London metal exchanges looks to be partly driven by hoarding than demand,” Morgan Stanley said.
hits the nail on the head. The big question now is who is hoarding? If its battery manufacturers then that nickel will not come back into the market.
If the current rate of depletion is maintained stocks in the LME will go below 200,000 tonnes before the end of this year. The last time stocks went below this level nickel was upwards of $6.25/lb.
This article is worth a read.
These bits in particular jump out:-
“The electric vehicle (EV) revolution will first emerge as a mixture of differing technologies, from hybrids to all-electric cars powered by an ever-evolving battery-metal-mix of cathodes, Ernst said.”
“Aggregate demand for battery-metals will rise at an exponential rate. And the days of the traditional combustion engine are limited,” he added.
“The mix of battery metals used in battery cathodes may well change drastically in the years ahead, along with the battery cathodes themselves, according to Ernst”.
ASIAN NICKEL CONF: Indonesia will be major source of battery-grade nickel - Macquarie’s Lennon
Indonesia will sidestep a lack of nickel sulfide resources to become a major source of battery-grade nickel, Macquarie Capital senior commodities consultant Jim Lennon said last week.
Speaking at Metal Bulletin’s sixth Asian Nickel Conference in the Indonesian capital of Jakarta on Wednesday September 12, Lennon highlighted a misconception that only nickel sulfide can be used to produce battery-grade nickel products.
Nickel sulfide is used to produce high-nickel content products such as nickel matte, nickel full plate cathode and nickel briquette, which previously were the main feedstock for nickel sulfate. In recent years, however, nickel-cobalt hydroxide - a by-product of laterite ore produced via high pressure acid leaching (HPAL) - has become an alternative feedstock for nickel sulfate.
Indonesia lacks nickel sulfide but because it is rich in laterite ore it could become a leading supplier of battery-grade nickel via hydrometallurgical production processes such as HPAL or the conversion of nickel pig iron (NPI) into nickel matte and then into nickel sulfate, Lennon suggested.
The latter process adds around $3,000-5,000 per tonne to the cost of producing nickel sulfide. The higher costs associated with NPI conversion tends to make this process a “back-up” means of nickel sulfate production, he added.
“For NPI producers, by having the ability to switch between [NPI and nickel sulfate], they have more optionality and premium structure,” Lennon said.
“There’s at least 700,000 tonnes of planned NPI capacity per year within the next 2-3 years, from 13 operating smelters in 2017 to 31 smelters by 2021 according to Indonesian government data,” Lennon said.
Metal Bulletin assessed the Chinese nickel sulfate price at 26,000-26,500 yuan ($3,785-3,858) per tonne, ex-works, on September 11, down 500 yuan on the top end of the range from 26,000-27,000 yuan on September 4.
The price fall represents the recent weakness in the three-month nickel contract on the London Metal Exchange; the LME’s daily official three-month nickel price closed at $12,325-12,350 per tonne on September 11, down from $12,565-12,570 per tonne on September 4, with the metal’s price succumbing to bouts of risk-off stemming from trade tensions between the United States and China.
Similarly, the Chinese NPI on-delivery price, at 1,080-1,090 yuan per tonne on September 11, was down from 1,095-1,130 yuan per tonne in the prior week following the decline in the LME nickel price.
Edric Koh, head of physical market volumes from the London Metals Exchange, shares his views on nickel’s performance so far this year as well as positive upcoming movements for nickel market dynamics at Metal Bulletin’s sixth Asian Nickel Conference in Jakarta on September 12.
Nickel sulfate min 21%, max: 22.5%; cobalt 10ppm max, China ex-works, yuan/tonne
11/09/18 26250.00 –
STLM 26500.00 -0.94%
Aug 18 26562.50 -1.18%
Jul 18 26625.00 -1.41%
Save this price
“Nickel has performed better in the LME base metals complex since the start of the year, supported by demand from electronic vehicle (EV) batteries,” Koh said.
Base metal prices were all lower compared to the beginning of the year, however, nickel was relatively resilient to the falls.
The closing price for the three-month nickel contract was at $12,620 per tonne as of September 11, down 9% from the beginning of the year. In comparison, zinc experienced a drastic 28% fall from the beginning of the year to close at $2,390 per tonne on September 12.
“First-quarter next year in 2019, we will be trying to discover the nickel three-month price via LME select, which is the electronic trading platform, with the closing price taking snapshots of all the trades in the last two minutes of the day,” Koh said.
The reason why nickel was chosen for the trial is because nickel’s trading volume contributes to 13% of all the base metals’ volume, so electronic trading for nickel’s proportion will be sizable chunk,” Koh explained.
As a result of market participants’ expectations of an EV boom by 2025, nickel sulfate has also been a key topic at the conference, and attendees have asked about the possibility of a nickel-sulphate contract being launched on the LME.
“What I see is a slow transition from nickel contracts to nickel-sulphate contracts. We continue to study nickel sulphate and may potentially launch [a contract] for it if there is demand in future. For now, focus is on cobalt and lithium,” Koh said.
Metal Bulletin assessed the Chinese nickel sulfate price at 26,000-26,500 yuan ($3,784-3,857) per tonne, ex-works, on September 11, dipping 500 yuan on the top end of the range from 26,000-27,000 yuan on September 4.
The fall in the nickel sulphate price was in response to the dips in the LME three-month nickel price over last week.
Currently, many major nickel-sulfate producers are planning to ramp-up output in response to the growing electric vehicle market, with a trend for rich nickel-content batteries underway.
Apart from a potential nickel-sulfate contract, the launch of a cobalt contract on the LME has gained some attention from conference attendees, similarly due to its EV applications.
The LME currently has a physical, deliverable cobalt contract, which allows for the addition of new brands to boost liquidity, while in early 2019 the LME will put forward a cash-settled cobalt contract, according to Koh.
When it comes to HPAL don’t forget this:-
And when it comes to converting either NPI or FeNi or HPAL MHP into Nickel Sulphate (which is NiSO4) its expensive.
So first off HPAL is fiercely expensive and fraught with technical problems and the conversion of what HPAL produces into nickel sulphate another significant additional on cost.
Jim Lennon is making it out to be an awful lot easier than it is.
There certainly won’t be any rush to build HPAL plants in Indonesia with the nickel price down around $5.50/lb. Maybe at $10/lb.+ but not at the level its currently at.
Electric vehicles continue to gain market share at an accelerating rate, but electrification could go even further, expanding into the realm of commercial trucking, marine travel and even to airplanes.
“The news today is full of cities and countries banning internal combustion vehicles, and of car companies launching electric models every other week,” Michael Liebreich, founder of Bloomberg New Energy Finance, wrote in a note. “There may still be some who are convinced that battery electric vehicles will never catch on, or that the world’s drivers will wait for hydrogen cars, but their numbers are dwindling.”
Liebreich laid out a case in which the whole transportation sector will move towards electrification, even to areas once thought impossible. To preface his argument, he pointed out that he and BNEF once seemed like an outlier, way more bullish on electric vehicles and clean technologies than other staid and serious forecasters. For instance, two years ago, when BNEF said that the EVs were going to upend the oil market over the next two decades, the IEA said that cumulative EVs on the road by 2030 would only reach 23 million, a paltry sum in the grand scheme of things. Earlier this year, the IEA revised that estimate up to 127 million by 2030 and 280 million for 2040.
To be sure, Liebreich is still a lot more bullish than the IEA, predicting 560 million EVs will be sold by 2040 – double the IEA estimate. But the IEA and other forecasters are moving in his direction.
But while EVs garner the lion’s share of attention, Liebreich argues that a bigger story lies elsewhere. For example, electric buses will take over the bus market much faster than passenger EVs. “BNEF expects electric buses to have a lower total cost of ownership in almost all charging configurations by 2019. By 2030, it expects 84 percent of all municipal bus sales globally to be electric, and by 2040, some 80 percent of the global municipal bus fleet will be electric.” It’s hard to overstate the importance of that conclusion, as well as the speed with which the energy transition in the bus sector is unfolding.
This is well worth 10 minutes.
This is particular.
Just in case you miss it:-
Inventory is still falling by the day but there is a growing awareness that a good part of what is leaving is simply being relocated as the battery supply chain, which needs the sort of Class I nickel traded on both London and Shanghai markets, preemptively builds its own stocks.
Combined exchange stocks have fallen by 162,000 tonnes so far this year but the International Nickel Study Group estimates the global market registered a smaller supply deficit of 81,000 tonnes in the first six months.
The disconnect becomes more evident over a longer time frame.
Analysts at Wood Mackenzie note that exchange stocks have fallen by 420,000 tonnes since their end-2017 (LME) and mid-2016 (Shanghai Futures Exchange) peaks.
“Over this period there was a cumulative market deficit of only 145,000 tonnes, suggesting 275,000 tonnes has likely transferred into private depots”. (“Metals & Mining Snapshot”, Sept. 18, 2018)
"275,000 tonnes has likely transferred into private depots” That’s a lot of nickel. To put that into perspective Tesla will use 17,500 tonnes of nickel in 2018 and they’re expected to churn out 250,000 Model S, X and 3s this year.
Stocks in the LME might continue to fall but don’t expect the price of nickel to necessarily recover as a result…
My target is 20.000 in 2021/2022
Either way, it seems to me that when you say “Stocks in the LME might continue to fall but don’t expect the price of nickel to necessarily recover as a result….” you do not seem so optimistic as in your were in yours previous posts.
I missed out “immediate term”, “near term” and “long term” in my previous posts. In the immediate to near term (ie. about 18 to 24 months from now, max.) I can see nickel prices stagnating or increasing only modestly. That forecast depends somewhat on what happens during the US mid term elections and whether the republican party is given a bloody nose by the electorate or only a mild slap on the wrist. In the long term I have absolutely no doubt that the price of nickel will be significantly higher than it is today.
The principal driver of the nickel price, as commentators keep reminding us, is demand from the stainless steel sector. The one thing that’s not clear to me from all of the reports I’ve read is the impact on the demand for class 1 nickel from a significant reduction in demand for stainless steel. The supply demand dynamic is a bit complicaed when it comes to nickel with two different grades and two different demand dynamics. There has been talk, currently ongoing, of a bifrucation in the LME nickel market to address this but so far nothing has emerged.
Being objective about where the market is currently and where it might go in the immediate, near and long term is vital if you are an investor. If you are a trader its a different ball game. I don’t trade I invest so my research, views and opinions are specifically designed to try and illuminate, as best I can, the rocky road ahead. It’s never a straight line but always liberally punctuated with ups and downs, some more vertiginous than others. If you can see what’s on the horizon it makes it easier to deal with the down days along the way.
Investor and long
Nickel is consolidating ahead of the low at $12,085 per tonne on Wednesday September 12.
The tail currently visible on today’s daily candlestick implies dip-buying has featured, but prices remain in a downward bias after attempts to gain stalled at $12,780 per tonne on September 13.
The stochastic fast line has crossed higher, the RSI has edged higher although at 38 it remains low overall.
Yet the 55 DMA has crossed below the 200 DMA on September 14, forming a bearish ‘death cross’, which suggests downside risk remains and we require nickel to vault resistance at $13,200 per tonne, which coincides with the 40 DMA to signal a break from the dominant down-channel since June.
Equities have seen a mixed start so far on Tuesday September 18 after United States president Donald Trump pushed ahead with tariffs on a further $200 billion worth of Chinese goods. Despite calls to renew trade talks last week, trade tensions are likely to escalate with president Trump threatening tariffs on a further $267 billion in Chinese imports if they retaliate to the latest tariffs.
Meanwhile metals and ores are included in a list of products that may be subject to retaliatory tariffs by China, should the United States impose a third list of duties on Chinese tech, drafted due to the alleged theft of US intellectual property.
Nickel stocks on the London Metal Exchange are trending lower; at 232,068 tonnes, they are down 134,544 tonnes or 37% from 366,612 tonnes at the end of December 2017. Fresh cancelations remain supportive - currently 23% of stocks are booked for removal. LME stocks are tightly held - one entity holds 30-39% of warrant positions. The cash/three-month spread was recently at $82 per tonne contango.
A favorable import arbitrage has supported a modest rise in Shanghai Futures Exchange warehouse nickel stocks, which totaled 16,863 tonnes on September 14, a week-on-week rise of 1,114 tonnes. Yet, stainless steel stocks continue to increase amid weak downstream demand, although are likely to face pressure while emission restrictions over winter will lead production to slow from the start of October.
Elsewhere in the physical market, premiums in Europe edged higher in the week to September 11 amid strong demand and tight availability.
The supply situation in the Philippines remains unclear; president Rodrigo Duterte has vowed to close all mines in the country after typhoon Mangkhut triggered deadly landslides.
The latest figures from the International Nickel Study Group (INSG) continue to reflect bullish underlying fundamentals - the refined market stood in a 81,100-tonne deficit in January-June 2018. In addition, the INSG expects the market to record a deeper 117,000-tonne deficit in 2018 rather than the 53,000-tonne deficit it forecast in October, supported by rising demand growth from the stainless steel sector and nickel-containing batteries.
Rapid growth in China’s electric vehicle market is also supporting nickel demand for batteries; EV sales increased 88% in January-August.
Despite the structural deficit, rising stainless steel stocks suggest the fundamentals may not be as strong as implied by falling exchange stocks. Despite signs of dip-buying interest, the failed attempt to rally last week suggests downside risks remain unless nickel can vault resistance at $13,123 per tonne to signal a break from the down-channel that has dominated since June.
ASIAN NICKEL CONF: Four things we learned in Jakarta
Here are four key takeaways from Metal Bulletin’s sixth Asian Nickel Conference held in the Indonesian capital of Jakarta on September 12-13.
Battery sector’s nickel consumption to soar; ramp-up of nickel sulfate production expected
While the stainless steel sector will remain the dominant consumer of nickel, demand from the battery sector is expected to surge fivefold over the next six to seven years, according to Metal Bulletin’s head of research, William Adams.
Nickel demand from lithium-ion battery producers is set to rise rapidly from the current 100,000 tonnes to 500,000 tonnes by 2025, while the market shifts toward more nickel-weighted batteries, such as the NCM 811 – a cathode composition of 80% nickel, 10% cobalt and 10% manganese.
In turn, global nickel sulfate producers are expected to ramp up output to meet growing demand from the electric vehicle (EV) sector. For example, Chinese nickel sulfate production is forecast to reach 450,000 tonnes in 2018 according to Clive Whittington, managing director of CM Whittington & Associates. This 450,000-tonne figure represents a 50% increase on the 300,000 tonnes of nickel sulfate that China produced last year, market participants told Metal Bulletin.
Elsewhere, BHP’s 100,000-tonne-per-year nickel sulfate plant at its Nickel West operation in Western Australia is expected to commence production by April 2019, Whittington added.
Indonesian export volumes still well below pre-ban levels
Despite an easing of Indonesia’s ban on unprocessed mineral exports at the beginning of last year, the country’s shipments of laterite ore still remain well below levels seen prior to the imposition of the ban in 2014, according to Jim Lennon, senior commodities consultant from Macquarie Capital Ltd.
So far in 2018, Indonesian exports of nickel products, including laterite ore, nickel pig iron (NPI) and ferronickel have totaled close to 550,000 tonnes of nickel in metal, equal to approximately 25% of global supply. In 2013, a year before the Indonesian government enforced the ban on unprocessed mineral exports, Indonesian nickel export volumes accounted for around 40% of global supply, Lennon said.
Indonesia taking market share from Philippine laterite ore producers
Indonesia’s resumption of laterite ore shipments is expected to take market share away from Philippine producers, who stepped in to replace the former following the imposition of the ban on unprocessed minerals exports in Indonesia.
Indonesia has granted laterite ore export quotas to the tune of 29.7 million tonnes for 2018, which is sufficient to cover China’s needs, even with four companies having their quotas – totaling 6.3 million tonnes – revoked, according to Alex Khodov, principal nickel analyst from Norlisk Nickel.
For the first six months of 2018, Indonesian laterite ore exports have risen six times from a year earlier, Khodov added. Although Khodov did not specify an exact tonnage for these shipments, Macquarie’s Lennon pegged the figure at approximately 9.23 million tonnes for the first half of the year.
The imposition of Indonesia’s ban on laterite ore exports in 2014 was widely anticipated by global markets, and more than 300,000 tonnes of laterite ore stocks were accumulated at Chinese ports. But as the ban went on, Philippines-origin low-grade laterite ore, mainly with nickel content of 1.4% and 1.5%, had been used an alternative to Indonesian material.
Now, however, with the resumption of Indonesian laterite ore shipments, which typically have a nickel content of 1.7%, lower-grade material from the Philippines is being pushed out of the market, according to Lennon.
Greater laterite supply supports growth in NPI output, could free up share of class I refined nickel
At the same time, NPI production from China and Indonesia is expected to grow strongly amid this greater supply of laterite ore, which could free up a share of class I refined nickel to be used in high-valued added applications, such the production of EV batteries, Norlisk’s Khodov told conference attendees.
Class I refined nickel, including nickel full plates and nickel briquette, is often used as an alternative to NPI in stainless steel production in China, but with more availability of NPI in the market, there is greater opportunity for class I nickel to be used in other industries, Khodov added
A good news for nickel fall stocks is the amount of gigafactories projected, they have to stock nickel.
Do not forget Indian growth and the so-called “silk route”, Chinese investments in infrastructure in other countries.
My question, is how much nickel has a solid state battery, or how much nickel can have a hydrogen battery.
TDT, as you can see LME stocks, has fallen less in recent times, which may be a reversal sign in the short term.
I’m following several opinions in seeking Alfa, but you have a very nice information source here: