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LME Nickel Stocks

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#904

#905

#906

#907

#908

#909

“These supply chains are the oil pipelines of tomorrow. The lithium ion battery is to the 21st century is what the oil barrel was to the 20th century," he added.


#910

#911

It doesn’t look like the market’s appetite for class 1 nickel has diminished as a result of the current China/USA trade war. Stocks in the LME have fallen by another 1,680 tonnes. Total now 171,108 tonnes.

TDT :sunglasses:


#912

Thanks TDT

“Cancelled warrants hit the 40%” Is that right?


#913

#914

Hi Nuno

Yes that is correct. Over the last 5 weeks the number of cancelled warrants in the LME has increased as the live warrant total has fallen. The result of that is the number of cancelled warrants as a proportion of overall stock in the LME has increased to 40%.

TDT :sunglasses:


#915

The Nornickel report estimates 2019 will see the nickel market in deficit by 60,000 tonnes. If the rate of depletion over the first 18 weeks of this year continues for the remainder of the year the deficit will be closer to 105,000 tonnes.

TDT :sunglasses:


#916

Chinese HPAL ventures in indonesia getting higher price tags,and longer time frames, currently the 700million USD chinese JV raised to 1.5 billion dollar price


#917

The really interesting figures are the live warrant totals. At the end of 2018 there was 157,074 live warrants in the LME. The total yesterday was 104,034. That’s a drop of 53,040 tonnes in 18 weeks. If that rate of depletion is maintained for the remainder of this year then by the end of 2019 live warrants in the LME will be at or close to zero.

TDT :sunglasses:


#918

In the short term, the stock drawdown for actual
consumption may slow down. Nevertheless, it is expected
to accelerate starting from 2021; and in 2022, the stocks
could fall further reaching the levels of concern as the NPI
production in China could be severely hit by the lower ore
availability because of the reinstatement of the
Indonesian ore export ban.

*Indonesian ore export ban!!!


#919

TDT as I said, my numbers are not wrong

"A combination of these 3 factors supported the demand growth for nickel in batteries last year: primary nickel use in batteries increased by 42% to 134 kt.

2018 134 Kt
2019?
2020?
2021?
2022?
2023?
2024?
2025?

Although we expect that the electrification growth rate
in China will slow down, we maintain the view that
China remains on track to reach the target of 2 M NEV
in 2020 and 7 M in 2025.


#920

Important: The growing NPI availability in the Chinese market could
substitute up to 70 kt of Class I nickel in 2019 from the
local stainless sector

And as you said TDT: The result of the environmental impact assessment
should also determine if sea tailings, a lower cost
alternative to tailings dams, could be used in Morowali.
As discussed in our previous report, the deep-sea tailings’
disposal that is utilised in the Ramu project could face
obstacles in Indonesia.
Unlike the Ramu project that benefits from deep seabed
in Papua New Guinea, the projects in Sulawesi do not
enjoy the same luxury. Hence, additional spending for
tailing dams could become necessary, further raising the
CAPEX.
Regarding the project commissioning timeline, we
maintain our view of a 2021 start, in Q2 at best, with the
project ramping up to capacity by 2023

NPI
In recent years, NPI production became the backbone of
the nickel supply growth. NPI production in China and
Indonesia increased by 170 kt in 2018.
The Indonesian NPI output growth was primarily the result
of a production ramp up by Tsingshan, with the company
operating 20 RKEFs by the end of 2018.
Indonesia has also played an important role in Chinese
NPI ramp up. Indonesia has been quickly expanding its
ore exports, following the relaxation of the export ban on
unprocessed nickel ore by the Indonesian government in
April 2017, reaching ~20 Mwmt last year (~200kt Ni).
Source: NN analysis, BGRIMM
With higher nickel prices in 2018, the NPI price increased
as well, supported by the lower availability of NPI in China,
as Tsingshan NPI exports from Indonesia fell from
~80 ktpa to negligible volumes after the company had
ramped up its integrated stainless lines. The lower
availability of NPI was evident despite higher local
production ~(+20 ktpa) and higher production from other
Indonesian suppliers becoming available for the Chinese
market ~(+40 ktpa).
The relatively high NPI price and the increased availability
of ore with consequently lower ore prices supported NPI
producer margins throughout 2018.
Source: NN analysis, Nieba
In 2019, the Chinese NPI output is likely to expand by
65 kt and could reach 535 kt. The bulk of the NPI
production increase in China is expected to come from
Xinhai - for now, the largest non-integrated NPI producer,
which is expected to start its stainless production soon in
Shandong province.
On 7th January 2019, the company started operation of
the largest RKEF line in China with total capacity of 48
MVA, which translates into ~14 ktpa Ni. Xinhai planned to
install 8 such RKEFs in total by the end of August 2019,
but we tend to believe that the project development is
going well ahead of schedule, with all 8 lines installed
already. This brings the total plant capacity up from
~140 ktpa in 2018 to >200 ktpa.
In the meantime, we note that our NPI forecast is fairly
conservative. Indonesia could supply more than 25 Mwmt
of ore to the Chinese market in 2019, and the Filipino ore
shipments would continue to attract the appetite of the
Chinese. Eramet is also planning to ramp up shipments of
ore from New Caledonia to 1.5 Mwmt in 2019. In addition
to the elevated ore stocks at the major Chinese ports, the
increased shipments of ore provide the raw material basis
sufficient to produce more than our estimate. Hence,
some market participants have higher expectations for
the Chinese NPI output.
Indeed, neither ore availability nor NPI capacity are
considered as significant obstacles that could cap the NPI
supply growth in China. However, we believe that NPI
producers could face headwinds from the environmental
restrictions closer to the year-end as well as short-term
NPI oversupply, as volumes of NPI that could be available
for shipping to China from Indonesia might more than
double to >150 kt in 2019.
In 2019, the majority of the expected incremental
Indonesian NPI shipments to China are the already
mentioned ~40kt of Tsingshan’s “spare Ni units”. We also
expect that Delong’s NPI plant will ramp up its output from
~40kt last year to 60kt in 2019, while Jinchuan’s
Indonesian NPI project, the launch of which was delayed
recently until 2H 2019, could add ~8 kt to the NPI supply.
Other NPI plants are expected to yield another 11 kt this
year.
Although we believe that in the medium to long term, the
NPI market is always in balance as a discounted
alternative to the traditional nickel feed for stainless
production consisting of Scrap, ferronickel, and Class I, in
the short term the market oversupply could tumble growth
rates, particularly across the higher-cost smaller nonintegrated producers.
The growing NPI availability in the Chinese market could
substitute up to 70 kt of Class I nickel in 2019 from the
local stainless sector. Yet, NPI continues to be a local
Chinese and Indonesian phenomenon with only limited
echoes in the neighboring countries.
In our last issue, we have thoroughly analysed the cost
perspective of NPI versus Scrap + Class I + FeNi. As scrap
payables remain low, we believe that NPI use outside
China, Indonesia, and potentially India (that relies on
imported scrap) will be very limited.
With confidence in the growing end-use base, we expect
a long-term 4% CAGR of stainless demand, marginally
below the historic CAGR of 5.6% as the developing
economies mature.
At the same time, the growing availability of scrap is
expected to lag behind the increasing demand, naturally.
From 2022, there is a risk of the global NPI supply being
restricted by the lower ore availability as the Indonesian
government is expected to reinstate the ore export ban,
which was lifted for 5 years in 2017.
0
200
400
600
800
1000
2012 2013 2014 2015 2016 2017 2018 2019E
Ni, kt NPI Production by Country
China Indonesia
(100)
0
100
200
RMB/t High-Grade NPI Profit Margin
gross
Moreover, we believe that the active substitution of
Class I nickel from the stainless sector could stop in
**2020, with the trend reversing from 2022. **
10
Source: NN analysis
HPAL Development
In the autumn of 2018, plans to build two large-scale
HPAL projects at the Industrial Morowali Park were
announced - namely, PT QMB New Energy Materials and
PT Huaqi. The first project is a joint venture of BRUNP,
GEM, Tsingshan, IMIP, and Hanwa. Tsingshan is also
involved in the second project in partnership with Huayou
that holds the majority stake in the JV.
The first project has announced conspicuously low CAPEX
of USD 700 M for a total production capacity of 50 ktpa
of Ni, which translates into the capital intensity of
USD 14,000 / t. To put it into the context of the existing
HPAL projects, it is 6-7 times lower than the achieved
capital intensity of Ambatovy and VNC and more than
3 times lower than that of the Ramu Nickel project.
Considering the HPAL’s history and technological
difficulties, the announced plan to commission the facility
by the end of this year also seemed overly ambitious.
Nevertheless, it was enough to influence some parts of
the investment community who was losing confidence in
the bullish EV narrative for nickel.
In our previous report, we have explained our doubts
regarding the planned CAPEX, planned commissioning,
and the ramp up schedule of the project. Our recent
findings confirm these initial doubts.
We are now hearing that the CAPEX target was raised to
USD 1.5 Bn. Currently, the company is working on an
environmental impact assessment for the Indonesian
Environment Ministry. According to Environment Ministry. According to the coordinating
executive director of IMIP, it could take about 6-8 months
to secure the permit.
The result of the environmental impact assessment
should also determine if sea tailings, a lower cost
alternative to tailings dams, could be used in Morowali.
As discussed in our previous report, the deep-sea tailings’
disposal that is utilised in the Ramu project could face
obstacles in Indonesia.
Unlike the Ramu project that benefits from deep seabed
in Papua New Guinea, the projects in Sulawesi do not
enjoy the same luxury. Hence, additional spending for
tailing dams could become necessary, further raising the
CAPEX.
Regarding the project commissioning timeline, we
maintain our view of a 2021 start, in Q2 at best, with the
project ramping up to capacity by 2023.
The second project, run by Huayou, is likely to follow a
similar construction and ramp up schedule.
The development of other HPAL projects has stalled
amidst the low nickel price environment and a drastic
reduction of the cobalt price.
Economics of laterite leaching projects strongly depends
on the payable cobalt value. The usual ratio of Ni:Co in
intermediate products of high-pressure acid leaching is
from 12:1 to 10:1.


#921

China will hit 2m NEV’s this year never mind 2020. As for 7m by 2025 I expect China to pass 7m in 2022. A CAGR of 60% is not unreasonable and if they do hit 2m this year then 7m+ by 2022 is doable.

The pressure/incentive to accelerate the adoption on NEVs is only going to increase with the passage of time.

TDT :sunglasses:


#922

Nickel and cobalt: Vale has produced less in New Caledonia, a strategic choice
It is Vale’s turn to report its worldwide nickel production results in the first quarter of 2019 (1Q19). The Brazilian mining giant, which has one of six factories in New Caledonia, wants to optimize its production to supply the pure metal of electric batteries.

Goro South Plant (VNC) (nickel & cobalt) © Claudine Wery AFP
© CLAUDINE WERY AFP South Plant (VNC) Goro (nickel & cobalt)
By Alain Jeannin
Posted on 09/05/2019 at 01:38
For nickel, Vale announces overall production down 6.5% from the first quarter of 2018, with metal sales down 13%. To explain this decline, Vale talks about maintenance operations at its main production sites, particularly in New Caledonia, before going into details, factory by factory. The world’s largest nickel producer prefers to give time to optimize its industrial sites to meet the quality requirements of electric battery manufacturers: high-purity nickel or cobalt.

Vale New Caledonia
These “adjustments” also show the complexity of pure metal production operations for the energy transition. In New Caledonia, as in Canada or China, at each end of the supply chain, process optimization imposes heavy constraints. Thus, in New Caledonia, the Southern Plant (VNC) produced 6,300 tonnes of nickel in the first quarter of 2019 (1Q19), ie 24.1% less than in the fourth quarter of 2018 (4Q18). Nickel oxide and nickel hydroxide production at the VNC site reached 5,400 t in the first quarter of 2019 (1Q19), 38.6% less than in the fourth quarter of 2018 (4Q18). In bottom of presentation, Vale assumes logically a concomitant fall of the Caledonian production of cobalt. The Southern plant produced 412 tonnes in the first quarter of 2019, 26.6% less than in the last quarter of 2018.

“The production cuts (in New Caledonia) are a consequence of the operations at the Dalian Refinery in China, which carried out the scheduled maintenance of an oven in March-April 2019”. Vale states that “it has suffered from problems of energy availability and delays due to the lack of availability of an autoclave (residual sludge treatment NDLR) from the southern plant.” A new proactive maintenance program is underway in New Caledonia, to to allow a rise in the industrial complex “commented Vale,” which will intentionally reduce the production of nickel in the second quarter (…) this new operational plan aims to optimize the industrial tool, improve the quality of the final product consistent with the requirements of the electric battery industry of the automotive industry.


#923

“Although we expect that the electrification growth rate in China will slow down…”

China isn’t the only game in town. I’m expecting the EV adoption rate in Europe to accelerate over the next couple of years. I also expect to see a modest increase in EV uptake in the USA and the RoW. China got out of the starting blocks pretty quickly. Everybody else now has to catch up.

TDT :sunglasses: