Nickel flies off before being put under pressure
Vale’s mining disaster in Brazil provoked an examination of the conscience of the most polluting mining producers. Nickel became scarce, metal prices climbed, before erasing their gains. Why ? China’s exports fell sharply …
Discreet negotiations around the price of a nickel contract in London © Alain Jeannin
© ALAIN JEANNIN Discreet negotiations around the price of a nickel contract in London
By Alain Jeannin
Posted on the 09/03/2019 at 02:52, updated on the 09/03/2019 at 03:18
Nickel, of which New Caledonia is the world’s sixth largest producer, was the best pupil of industrial metals during the first three sessions of the week on the London Metal Exchange (LME). The metal has reached a high of 13.765 dollars per ton, a price level never seen since August 18, 2018.
Friday, poor Chinese economic statistics have erased the gains recorded earlier this week. Nickel is subject to headwinds: a strong dollar and a decline in Chinese exports are unfavorable, conversely, a supply below demand and a deficit announced support metal prices.
China still …
In London and Shanghai, analysts followed the rise in nickel. Lower metal production in China, particularly in Mongolia’s Autonomous Province, has contributed to concerns about Chinese steelmakers’ supplies. Maintenance operations at the metallurgical plants have resulted in a decline in nickel smelting (NPI) production noted Marex dealer Spectron. To make matters worse, a lack of electricity has slowed production at many factories in Mongolia’s Autonomous Province.
But what dominated the news this week is environmental issues. They have returned to the agenda of the London metals market. In China, still in the autonomous province of Inner Mongolia, particularly polluting industrial sites have been closed in recent days. They belong to Xinhai Technology, China’s largest producer of cast iron (NPI) with 120,000 tons per year of nickel content. More and more, the question now seems to be “how” to extract more clearly industrial metals including nickel. This subject, the environment, was at the heart of the sale of Mining Indaba in early February in South Africa.
Sanford Bernstein, the leading North American analysis company in the sector, said a Tshingshan nickel project in Indonesia would require more time and investment than expected. New standards, especially for the protection of the environment (especially after the Vale disaster) will have to be integrated. For example, the London nickel market (LME) is awaiting confirmation of a decision targeting the Brazilian producer Vale. A court order of 26 February requires the world’s largest nickel producer to comply with environmental regulations for the operation of its Onça Puma mine and ferronickel plant (18,000 tonnes of annual nickel content) in the Brazilian state of Para near the city of Ourilandia do Norte in Brazil. The Brazilian group, under pressure from the authorities, will appeal the decision requiring it to stop production of nickel on the site, according to information from Bloomberg. Vale CEO Fabio Schvartsman presented his temporary resignation on 2 March following a recommendation by the Brazilian prosecutor’s office. Three other executives of the company left their office after the rupture in January of a dam of mining residues in Brumadinho in Brazil …
“The inclusion of new environmental standards by mining producers will contribute to the global nickel deficit that will grow every year by at least 2025”
Dee Perera, Marex Spectron Analyst at LME.
Nickel, which had reached new highs since the beginning of the year, ran out of steam Thursday night before dropping sharply Friday. New statistics have indicated that Chinese exports fell more sharply in three years in February, suggesting that the slowdown in the Chinese economy will continue despite a series of support measures taken by Beijing. China’s industrial exports fell by 21% year-on-year in February, the sharpest decline since February 2016, as a result of a slowdown in new orders in the context of a trade war between Beijing and Washington.
Friday, the price of nickel was down slightly, over the week, the metal recorded a small loss of -0.13%. It closes at $ 13,172 per tonne ($ 5.97 per pound.)