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LME Nickel Stocks

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#402

Image source: Dec 20, 2018 Reuters London- COMMODITIES: Andy Home

https://www.bloomberg.com/news/articles/2018-12-20/asian-stocks-face-mixed-start-after-u-s-slide-markets-wrap


#403


#404

That’s a rather sobering assessment from Andy Home. Can’t fault or disagree with anything he says.

The only light at the end of the tunnel is Trump is now half way through his term. The last 12 months of his 4 years should be taken up with him trying to get re-elected (assuming of course he lasts the full 4 year and he seeks re-election). He will either try to reach a deal with China prior to the new presidential campaign beginning so he can claim he has beaten them into submission or he will continue with his trade war. The latter being the option I suspect he will choose if the polls are predicting a landslide defeat. Whatever happens on that front I don’t see 2019 being a particularly good year for metals. 2020 on the other hand, with his tenure at the White House drawing to a close, should be another matter.

TDT :sunglasses:


#405

#406

https://www.metalbulletin.com/Article/3850557/Latest-news/2018-REVIEW-10-things-that-defined-the-battery-raw-materials-markets-this-year.html

2018 REVIEW: 10 things that defined the battery raw materials markets this year
The past 12 months have served as a reality check for the battery raw materials markets.

While 2017 was a year of soaring prices and investor interest, 2018 has seen supply responses, substitution debates, and at times, plummeting prices.

It’s not that the fundamentals aren’t still strong. By 2025, Fastmarkets’ forecast is for plug-in electric vehile (EV) sales to grow at a compound annual growth rate of 38%, which will mean an EV penetration rate of 16%, with some 17 million EVs being sold annually that year (up from 1.4 million plug-in sales across the United States, China and Europe during the first 10 months of 2018).

But for the time being, supply concerns surrounding cobalt and lithium have eased, while demand for batteries and electric vehicles themselves is expected to intensify from 2020 and beyond.

Sentiment has undeniably changed compared with this time a year ago when, for example, cobalt prices were soaring after investment vehicle Cobalt 27 added more than 700 tonnes of cobalt to its stockpile.

Here, Fastmarkets reporters summarize 10 things that have defined the battery raw materials sector in 2018.

Low-grade cobalt trading at a premium to high-grade metal
Cobalt prices slumped in the second half of the year amid increased availability of Chinese metal, turning sentiment, weaker summer demand, and concerns over mounting hydroxide supplies. But grade premiums and discounts still highlight areas of demand and tightness affecting the battery sector.

High-grade cobalt brands, broadly comprising cut cathodes and rounds qualified for use in the super-alloy sector, have traditionally traded at a premium to the low-grade market, but that changed in 2018. For large chunks of the year, the two grades traded at parity amid tightness of the broken cathodes and briquettes (which broadly comprise the low-grade quote) preferred by the battery sector where their metal purchases are concerned.

There have been, however, some occasions where that tightness has become so acute as to see low-grade trade at a premium to high-grade, particularly when consumers have come into the spot market with tight specifications. That shift happened for the first time in August, when, come the end of the month, low-grade cobalt prices were assessed at $33-33.60 per lb, in-warehouse, compared with $32.55-33.55 per lb for high-grade material.

(From January, Fastmarkets will rename its low-grade and high-grade cobalt price assessments as standard-grade and alloy-grade respectively.)

High cobalt hydroxide payables squeezing sulfate producers’ margins
Chinese cobalt producers’ profit margins have been vulnerable for most of 2018 amid high cobalt hydroxide payables (agreed as a percentage of the Fastmarkets low-grade cobalt price) and falling spot cobalt sulfate prices. The discount for Chinese cobalt sulfate against the low-grade cobalt benchmark (at 20.5% Co basis) has been widening since the second quarter and hit a record high at $2.55-2.83 per lb in November, according to Fastmarkets’ data. In contrast, hydroxide payables for 2018 were agreed at 80% and above, compared with discussions around 60% more recently.

Such a big gap also made Chinese buyers to shift to spot market for cobalt intermediates amid reluctance to commit to long-term contracts. In addition, some Chinese consumers have even backed away from purchase agreements in a weakening market.

Cobalt hydroxide surplus dampening sentiment
Panic stemming from the emerging cobalt hydroxide surplus was one of the main reasons behind falling cobalt prices – especially in the Chinese market – since the second quarter of 2018. The rally in prices since 2017 stimulated aggressive expansion of production, in addition to new production already scheduled to come on stream.

Late last year, Glencore announced the restart of production at Katanga in the Democratic Republic of Congo (DRC), with output expected to reach 34,000 tonnes per year in the 2019 financial year, (though the production guideline was since revised downward by 8,000 tonnes after excessive levels of uranium were detected in the mine). In addition, ERG’s Metalkol Roan Tailings & Reclamation project in the DRC is expected to produce 14,000 tpy in 2019. The cobalt hydroxide surplus is estimated to reach 6,729 tonnes in 2019, according to Fastmarkets’ battery raw material research team.

China’s EV subsidy policy expediting a shift to nickel-rich batteries (in theory)
February revisions to China’s EV subsidy policy raised the threshold of minimum driving range from 100km in 2017 to 150km. It brought forward a shift to nickel-rich batteries which in return reduces the amount of cobalt required in the cathode. As a result, the hesitance to purchase cobalt sulfate from downstream consumers kept cobalt sulfate prices under pressure since the second quarter.

But the bottleneck in technological innovation for a safe nickel-rich battery has led consumers to resume their buying of cobalt sulfate, in addition to the traditional stockpiling needs ahead of the Chinese New Year holiday on February 4-10.

Increasing nickel sulfate output, rising briquette liquidity
Nickel sulfate output in China is estimated at 450,000-500,000 tonnes, and around 700,000 tonnes globally, according to Xu Aidong, chief analyst at Chinese research organization Antaike. This compares with 300,000 tonnes of nickel sulfate produced in China last year, according to market participants. The rise in nickel sulfate output was in response to surging demand from the EV sector and has also resulted in increased liquidity of nickel briquette – a key sulfate-making raw material.

Fastmarkets assessed the China nickel sulfate ex-works price at 23,700-24,200 yuan ($3,438-3,511) per tonne on December 18, which is down from an assessed price of 25,500-27,500 yuan per tonne on July 24, when the price was launched, amid declines in the London Metal Exchange nickel price.

Nickel’s EV boost remaining at large
The electric vehicle boom, that was predicted to boost nickel prices in the coming years is yet to materialize. Nickel prices are down by about 13% on the year, trading at around $11,000 per tonne. The slowdown of the Chinese economy and its bearish effects on stainless steel demand, combined with bearish sentiment from the US-China trade war have kept prices low.

But there are also doubts that class-one nickel supply for battery applications will be as tight as expected, making the prospects of such a boom less likely. A joint venture including Tsingshan Group, GEM and Brunp announced it will undertake a projected $700-million investment to develop a high-pressure acid-leaching project in Indonesia. The project has a target production of 50,000 tpy. It will also be able to produce 50,000 tpy of nickel hydroxide intermediates and 150,000 tpy battery-grade nickel sulfate for batteries.

Increased supply at cheaper costs hitting lithium prices
Slower spot consumption year on year due to the Chinese subsidy policy change, cheaper material produced and sold in China, and a supply surplus have pushed down Chinese spot market prices and fourth quarter contract prices.

The battery-grade lithium carbonate spot price in China has fallen by around 55% year on year to 75,000-83,000 yuan per tonne as of December 20. The Chinese battery grade lithium hydroxide spot price, meanwhile, has experienced similar weakness, falling to 100,000-110,000 yuan per tonne on December 20. This is 28% lower than an assessed price of 145,000-150,000 yuan per tonne a year earlier.

Battery players seeking new ways to price their raw materials, hedge their exposure in volatile markets
Increasing interest in the battery and EV sectors meant focus on previously niche parts of the nickel supply chain, meaning new reference prices for nickel sulfate and briquette. Metal price references have traditionally been a proxy for the strength of the entire cobalt supply chain, but now price discovery for cobalt sulfate provides a sound indication of the strength of the battery raw material itself.

At the same time, price volatility in cobalt and lithium left the market seeking a new way to hedge their exposure: the LME for one has been vocal about its intention to launch a cash-settled futures contract as a better reflection of how the physical cobalt market trades. It has also launched a market consultation into the best way to provide a hedging tool for the lithium industry.

Rising demand from battery sector underpinning China’s graphite price
China’s spherical graphite spot price has maintained an upward trend in 2018, up by around 15% from $2,250-2,700 per tonne fob China at the start of this year to the current $2,800-2,900 per tonne, underpinned by fewer spot cargoes and strong demand from anode producers in response to the rapid growth in battery end-markets.

Prices for flake graphite, the raw material for spherical graphite, have basically been stable through 2018, only moving down slightly during August to November on sufficient supply due to increasing imports of material entering China. But prices rebounded to near their previous levels in December on a reduction in supply during the country’s winter months and increased stockpiling by downstream consumers in the run-up to the end of the year.

Fastmarkets assessed the price of flake graphite 94-97% C, -100 mesh, at $650-790 per tonne on December 20, up from the $630-790 per tonne reached on October 25 and returning to almost to the range held throughout most of 2018.

And VRB adoption looking further out of sight following vanadium’s stellar year
Vanadium redox batteries (VRB), which can be used to store energy generated from renewable sources, are complementary to the global sustainable energy drive, but their mass market viability looks further out of sight following major increases in vanadium prices this year.

Vanadium pentoxide flake (V2O5) prices hit all-time highs of $28.50-29.15 per lb, in-warehouse Rotterdam, in November, up from $9.90-10.20 per lb at the start of the year, according to Fastmarkets’ assessment.

Price increases of such a scale come down to tight supplies of vanadium and good demand from the rebar sector, but in the process, inhibit the development required to bring vanadium flow batteries to the mainstream market.


#407

#408

#409

Source Nornickel 19.11.2018

“The market could be in balance or minor deficit over
2020-2021 only if the Indonesian NPI ramp-up would
cope with financial obstacles and infrastructural
bottlenecks, while Chinese NPI would exceed 500 kt,
assuming limited impact from environmental cuts.
From 2022 onwards, we believe that the strong
demand growth driven by megatrends could push the
markets into structural deficits, as we expect the
Indonesian ore export ban to sway the market
balance.”


#410

TDT

Have you ever thought like the Anak Krakatoa volcano, could affect the Nickel mining ???
Do you have any idea what’s going on with the mining sector, in Indonesia?


#411

It doesn’t seem like it has so far. We will hear soon enough if it does.

What’s likely to impact the mining sector in Indonesia in the coming years is political interference and resource nationalism. I can see the Chinese diversifying in the coming years. Having too many eggs in one basket is never sensible.

TDT :sunglasses:


#412

This is encouraging.

“The latest International Nickel Study Group (INSG) statistics pegged the global refined nickel market in a deficit of 118,700 tonnes over the January-October period in 2018, up from the 86,500 tonnes in the corresponding period of the previous year, indicating that nickel’s fundamental backdrop remains mildly positive.”

“Providing further support to nickel’s price is the fact that the supply growth is slower than the market expectations,” Citic Futures Research said on Thursday.

https://www.metalbulletin.com/Article/3852090/LIVE-FUTURES-REPORT-0301Bearish-sentiment-continues-to-pressure-SHFE-base-metals-prices-nickel.html

Nickel stocks in the LME are still falling so that reinforces what Fastmarkets is saying.

TDT :sunglasses:


#413

There was a fairly large jump in the number of canceled warrants relative to live warrants in the LME yesterday. That usually indicates that a big draw down in nickel stocks at some point in the near future is about to happen.

Nickel in the LME currently stands at 205,752 tonnes. Does anybody remeber this, from the Amur Minerals Q&A section of their web site?

Nickel demand is expected to hit just over 2.2m tonnes in 2018 or about 6,030 tonnes of nickel per day. That’s 34 days of inventory in the LME alone. What is not clear is whether Amur’s Q&A reply refers to LME nickel only or all nickel inventory. The SHFE doesn’t hold much, currently, in the way of nickel so I think it safe to discount whatever is held there.

According to Amur the price of nickel, given current inventory levels, should be at least $2/lb. higher than it is presently.

Having said that they also predicted, in the same A&Q, the following:-

“The nickel market appears to be splitting into two components.”

So far that hasn’t happened either.

TDT :sunglasses:


#414

image


#415

The last 6 to 7 months doesn’t make much sense does it? The principal reason, I suspect, is Trump’s trade war is the cause.

The other explanation is LME stocks are class 1, 99.8% pure nickel, which is in demand from the battery sector, but the price is being driven by a fall off in demand for class 2 non-LME nickel from the stainless steel sector. Given that stainless steel accounts for 70%+ and batteries only 4%+ of the nickel market its hardly suprising we are seeing what we are .

An end to the trade war or the election of a credible president in the USA will see the downward pressure on price reverse IMO.

TDT :sunglasses:


#416

The price could be turning! Nickel popped its head up above $5/lb. briefly this morning. It got a nose bleed so dropped back down again fairly quickly. It looks like its testing the waters for a run up so more to come, maybe.

TDT :sunglasses:


#417

Nickel in the LME dropped by 900 tonnes today, total now standing at 204,852 tonnes. At this rate we should be below 200,000 tonnes sometime next week. What we need to see now more than anything is the price responding.

TDT :sunglasses:


#418

and China’s economic desaleration


#419

The many layers of US/China tensions

  1. Intellectual property: US accuses China of forcing US companies to share sensitive technology and steals intellectual property. There will have to be “structural changes” in how China handles technology transfers, intellectual property protection and theft on the internet.

  2. Huawei and 5G: China’s largest telecommunications equipment manufacturer, has long denied the accusations by the US and its allies that it facilitates espionage sponsored by the Chinese government. The company is developing 5G technology and has one tenth of the essential patents worldwide.

  3. Made in China 2025: This plan aims to turn China into a leader in advanced production by targeting ten emerging sectors including robotics, clean energy and biotechnology. For the US, such state intervention in the industry violates World Trade Organization rules and could create an unfair environment for foreign investors.

  4. Energy: The United States is one of the world’s largest exporters of oil and natural gas, while China has emerged as one of the world’s largest buyers of both products.

  5. Agricultural Imports: Investors will be watching to see if China will remove tariffs it imposed on American agricultural products - including soybeans, corn, cotton, sorghum and pork - in retaliation for Trump’s protectionist measures. Suspension of fees would encourage private buyers to immediately resume purchases of these products.

  6. Car Rates: Car fares made in the US were temporarily suspended on January 1st. After imposing a 25% surcharge on US cars, China has temporarily suspended the tariff since January 1 in an attempt by the powers to relieve tensions.

  7. Access that banks will have to the market: China has promised to increase the access of financial companies that belong to foreigners. Bloomberg Economics estimates that foreign banks and brokerage firms could achieve profits of more than $ 32 billion a year in China in 2030.


#420

American hypocrisy is rather nauseating but it is what it is I guess.

It will all blow over eventually.

TDT :sunglasses:


#421

_“Energy: The United States is one of the world’s largest exporters of oil and natural gas, while China has emerged as one of the world’s largest buyers of both products”.

That’s not quite correct. The USA is the world’s largest producer of oil and gas but its not the largest exporter. That title goes to Saudi Arabia. The States is self sufficient in oil and gas and retains the majority of its production for its own use.

TDT :sunglasses: