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LME Nickel Stocks

lse:amc

#122

Bad News,

Two gauges of activity in China’s manufacturing sector worsened in September, reflecting the nation’s economic slowdown and fallout from the trade war with the U.S.

https://www.bloomberg.com/news/articles/2018-09-30/china-s-manufacturers-slow-in-september-as-trade-war-worsens


#123

{"Commodities, for good reason, are not the flavor of the month with investors but for anyone looking ahead 2019 could be a good year for copper and nickel, if 400 metal industry professionals are correctly reading their crystal balls."

https://www.forbes.com/sites/timtreadgold/2018/10/10/after-a-tough-12-months-copper-and-nickel-should-be-next-years-metal-winners/#32fe3a4d6ae6

TDT :sunglasses:


#124

This is worth reading.

TDT :sunglasses:

NICKEL V COBALT: THE SECRET EV BATTLE FOR THE LITHIUM ION BATTERY
1st June 2018 - Benchmark Mineral Intelligence

THERE IS A LOW PROFILE BATTLE OCCURRING BETWEEN RAW MATERIAL MINERS AND CHEMICAL MANUFACTURERS FOR THE FUTURE OF THE LITHIUM ION BATTERY.

THERE IS BATTERY TUG OF WAR BETWEEN NICKEL AND COBALT THAT IS BEING DRIVEN BY ELECTRIC VEHICLE (EV) MANUFACTURERS’ DESIRE TO CUT BATTERY CELL COSTS AND INCREASE ENERGY DENSITY.

BUT THE PUSH TO HIGH NICKEL 811 CATHODE CHEMISTRY IS DOGGED BY BAD ANALYSIS AND GUESS WORK THAT SPELLS THE END FOR COBALT AND A NEW ERA OF NICKEL.

THE TRUTH IS A LITTLE MORE COMPLICATED AS BENCHMARK MINERAL INTELLIGENCE EXPLAINS.

—————————

One of the biggest talking points in the electric vehicle (EV) and lithium ion battery space right now is the emergence of an 811 NCM (Nickel Cobalt Manganese) cathode chemistry that many believe will result in the hammer blow for cobalt and the anointing of nickel.

For those newer to the battery industry, 811 quite simply stands for 8 parts nickel, 1 part cobalt, 1 part manganese. It is the natural evolution from the traditional 111 chemistry (equal parts of each), 523 (5 parts nickel, 2 parts cobalt and 3 parts manganese) and 622.

A word of warning: common error is to use the non-Chinese initials of NMC which would incorrectly point to 30% cobalt content in 523.

While there is much excitement over the high nickel chemistry, which brings with it higher energy density and a much bigger demand profile for nickel suppliers; the reality is that NCM 811 has not yet fully arrived and is some years away from having a major impact.

Some analysts point to the Chinese “black box” when explaining where 811 is being widely rolled out. However, China is not a black box if you are willing to travel to cathode and lithium ion battery plants within the country and put the miles in.

The reality is such that Chinese cathode manufacturers are developing 811 chemistry and small scale commercial lines but it is not yet being rolled out in any major way. The chemistry is however in production, that much is true, and that it is being driven by the consumers.

The impact of 811 on the lithium ion battery cathode market, however, is going to be minimal in the short term and Benchmark Mineral Intelligence forecasts this will not exceed 5% of total NCM cathode production until after 2020.

In fact, it is Benchmark‘s expectations that 811 cathode material will reach 25% of NCM’s market share by 2026 – enough to cause disruption in the raw material supply chain, but far from takeover.

Much like their Chinese counterparts, Korean and Japanese manufacturers are also developing 811 formulations at the moment and their arm has been forced by two main reasons.

Stockpiled cobalt at Cobalt 27 warehouses
The first is cobalt prices.

In a 111 cathode, which is widely quoted to show the huge impact of cobalt prices on lithium ion batteries, cobalt understandably moves the cell manufacturing cost needle.

In a 111 cell, Benchmark’s new Lithium ion Battery Cost service reports that cathode material equates to 40% of the cell cost – significantly higher that any other NCM or NCA material due to cobalt being a third of that input by volume.

This has resulted in a surge in 523 production and to a lesser extent 622 output globally – especially in China which reduces cobalt’s input into a cathode to 20% while significant increasing nickel’s role to 50% and 60% (from 30%), respectively.

The second is auto pressure.

Understandably, EV manufacturers want to do all they can to reduce their price risk exposure to cobalt which is continuing to rise. Therefore, the push towards 523 and 622 is more than welcomed, especially as it brings with it increased energy density thanks to the nickel.

Therefore, it is unsurprising that in the same conversations, cathode manufacturers are pressured by the auto companies to speed up the evolution to 811 and even 7 1.5 1.5 chemistry.

To reduce cobalt to such a minor role – the major element involved in stabilising the battery – brings with it huge risk, especially in the first wave of pure EV models to hit the road when safety scrutiny is at its highest.

Lower cobalt cathodes, not lower cost

The third factor to consider is that despite the expensive cobalt being dramatically reduced in these higher nickel cathodes, it does not necessarily mean it will be available to the market at a significantly lower cost.

Current technology dictates that 811 cathodes need to be produced in an inert environment as to prevent any reaction with the atmosphere. Therefore, any new cathode plant producing this material will need to build a new, dedicated, inert atmosphere, production line specific to 811.

Cobalt conundrum remains regardless

Even if despite all these challenges, the NCM 811 adoption is quicker than Benchmark Mineral Intelligence expects, the cobalt industry will still face a supply problem.

The chart below outlines a scenario in 2026 where 811 is adopted under three scenarios to serve a lithium ion battery industry that has grown to just under 1TWh.

The first assumes that 811 is 10% of that NCM future cathode market total. Under this scenario, battery grade cobalt output – which stands at nearly 50,000 tpa in 2017, the last full year of production – will have to increase to 205,000 tpa to meet the cobalt demands of the entire battery industry.

If 811 equates to 25% of the cathode market, 193,000 tonnes of battery grade cobalt will be needed.

Under our most bullish scenario where 811 is equal to a huge 40% of the NCM cathode market in 2026, the lithium ion battery industry will still require 180,000 tpa of battery grade cobalt.

That is over a tripling of battery grade cobalt production last year and just under a doubling of the industry’s total annual production.

There is little doubt that nickel’s future in lithium ion batteries is bright, however the cobalt conundrum is far from over. And considering it will be near impossible to commercially engineer cobalt out of a lithium ion battery within the next decade, it is fair to say that the cobalt conundrum is just beginning and the industry’s challenges will shift from supply to demand.


#125

Thank you for sharing TDT, but do not forget

Nickel is a very interesting commodity, but it will take time. As you say TDT, Stocks level are for now the most important thing to follow, and of course the cathode`s tecnology.

“As the Ni content increases in the NMC-class materials, the energy content goes up, but usually at the expense of stability. High-Ni-content materials also tend to incur extra processing costs. While NMC-111 is already commercially well established and NMC-622 has seen recent market introduction, NMC-811 appears on the automotive roadmaps due to its superb energy content. It still suffers, however, from significant capacity fade and higher safety risks. We are skeptical that it will see widespread adoption in the EV industry within the time frame of our assessment (2025)”

https://www.cell.com/joule/fulltext/S2542-4351(17)30044-2


#126

As part of the drive to the last option, Mercedes-Benz is putting the GLC F-CELL—a plug-in hybrid combining a 13.5 kWh battery (gross, 9.3 kWh net) and a fuel cell stack (combined H₂ consumption 0.34 kg/100 km, combined CO2 emissions 0 g/km, combined electrical consumption 13.7 kWh/100 km) into series production. (Earlier post.) Initial vehicles are to be handed over to selected customers at the end of October


#127

Nomura provides five main risks in the markets:

  1. China’s deceleration vs. US “outperformance” in the midst of trade wars;

  2. Italy’s budget with a potential “vicious circle” of higher yields, lower growth and worse deficits;

  3. Underperformance of emerging markets;

  4. Brexit negotiations;

  5. End of debt purchase programs at the global level.


#128

#129

#130


#131

I loved this bit.

If it were just about trade, China’s ready to do a deal, in the opinion of Charles Li, chief executive of the LME’s owner, Hong Kong Exchanges and Clearing.

But “the America we thought we were talking to is not the same America that is now talking to us.”

That just about sums it up.

TDT :sunglasses:


#132

Problems ahead:

“Fastmarkets MB analyst Andy Farida said nickel still sees a robust fundamental backdrop of persistent decline in global exchange inventory, structural market deficit and an optimistic demand outlook. However, he warned that this material remains susceptible to a rapid demand contraction if Chinese economic growth rate starts to cool off”.

Nickel price volatility likely to remain “pretty intense”
World output of stainless steel leapt 7.6% in 2016 and a further 6.7% in 2017 - but “a turning point” has been reached and the rate of increase can be expected to slow to perhaps 3.4% in 2018 and 2.6% in 2019, according to Jim Lennon, Senior Commodities Consultant at UK-based Macquarie Capital (Europe) Ltd.

he guest speaker at the latest gathering of the BIR Stainless Steel & Special Alloys Committee also emphasised that the current “protectionist phase” in the stainless steel market is rendering more difficult the forecasting of future developments.

According to BIR, nickel pricing has been generally upwards in recent years owing to demand growth driven principally by strong global stainless steel production, Mr Lennon told the meeting in London on October 7. Furthermore, nickel use in batteries is growing at 30-40% per annum from a low base.

Nickel price volatility has been “pretty intense”, he added, “and I don’t see that changing any time soon.” He projected that the LME cash price would average around US$ 16,000 per tonne in 2019, as compared to the US$ 13,800 forecast for 2018 as a whole. Nickel is in structural deficit but overall stocks remain high despite a recent “dramatic” decline, delegates were told. Latest figures from the International Nickel Study Group suggest world usage of the metal will climb to 2.422 million tonnes next year and outstrip global production of 2.389 million tonnes.

Mr Lennon’s presentation highlighted the emergence of Indonesia as a key player in the nickel and stainless steel markets. The country could well account for around a quarter of global nickel supply this year and has been “a very large contributor” to stainless steel production growth over the last 12 months as a result of the venture owned by China-based Tsingshan. Described as “by far the lowest-cost stainless steel producer”, this added 2 million tonnes of annual stainless melt capacity in Indonesia last year, with a further 1 million tonnes for the second half of 2018. More than 80% of its exports had been going to China but Taiwan has now taken over as the leading importer, according to Mr Lennon.

In terms of global nickel use in stainless steel production, the guest speaker projected that the nickel in scrap component will climb from 904,000 tonnes in 2017 to 945,000 tonnes this year and perhaps 983,000 tonnes in 2019.

Reviewing market developments since the previous BIR Stainless Steel & Special Alloys Committee meeting in May of this year, board member Omar Al Sharif of UAE-based Sharif Metals International stated: “Concerns about the trade war between the USA and China, along with falling raw material prices for stainless steel, have been recurring themes.” While able to maintain a high scrap melt ratio, he added, US stainless mills appear confident of sourcing material as required “and at continued historically high discounts applied to nickel values”.

Source: Bureau of International Recycling (BIR)


#133

Another great week

image


#134

No avoiding the long-term bull story

Nickel is widely perceived to
have a bullish long-term outlook
as it benefits from the growth
expected in electric vehicles
(EVs) and lithium-ion batteries
over the next decade or so.
The question is: how much of
this bullishness will be priced in
during the next year?
We err on the bullish side,
providing global trade-related
stresses dissipate and risk
appetite returns. History shows
that when nickel has a bull
narrative it can rally hard and
fast. And it is still trading at
historically low levels.
The sell-off this summer driven
by macro concerns has seen
much of the speculative length
built into nickel prices on the
back of the battery story stopped
out. But we think the battery
bulls will be back and we wouldn’t
rule out seeing nickel touching
$18,000 per tonne in the second
half of 2019 given a global refined
market supply deficit that looks
set to expand next year to 81,000
tonnes, and the continuation of
stockpiling of Class 1 nickel units
down the EV supply chain.
Our annual average base-case
forecast is now $16,825 per
tonne, which comes on the back
of $13,589 per tonne in 2018
and assumes a return to $14,000
per tonne in the fourth quarter.
Two areas of concern for the
short term are: (1) the emergence
of oversupply in stainless steel in
Asia; and (2) growth in nickel pig
iron production in Indonesia, as
capacity continues to ramp up
and in China as ore stocks and
average ore grades recover.
Key may be China’s
authorities. They have had some
success in curbing excesses in the
carbon steel market, but so far
stainless has been somewhat
overlooked. That may change
this winter. But even aside from
government-enforced cuts, the
probability of Chinese stainless
producers dialing down
production for market reasons
this winter remains.


#135

The bull is off to a good start this week. 2,124 tonnes leaving the LME today. The total left, 222,102 tonnes.

TDT :sunglasses:


#136

Sales of new-energy vehicles – a category comprising electric battery cars and plug-in electric hybrid vehicles – remained strong, up 54.8 percent in September, slightly faster than a month earlier.

That took new-energy vehicle sales in the first nine months of this year to 721,000 vehicles, up 81.1 percent from the same period a year earlier.


#137

China is on for a 1.1m to 1.2m total for 2018 on these figures. Pretty much as predicted.

TDT :sunglasses:


#138

TDT

Do you have updated cost of using HPAL to produce nickel for batteries???

There is a lot of new projects in Indonesia , china is bombing there.


#139

https://www.nasdaq.com/article/nickel-producers-eye-indonesia-to-plug-into-ev-battery-market-20180914-00171


#140

Nuno

There’s no standard cost for HPAL. Costs are more on a project to project basis. These are some of the HPAL projects built over the last 20 years or so.

All massively over spent. Ramu actually topped out at US$2.1B and not US$1.4B as quoted.

BHP built Ravensthorpe, operated for a very short time, never hit name plate, mothballed it then sold it writing down a multi billion dollar loss.

Sumitomo was the major partner in Ambatovy in Madagascar. The project massively over spent, has never reached nameplate and has only been kept afloat by the cobalt. I don’t think it has ever made a profit.

All the other HPAL projects have their own story. These plants were designed to produce upto 60,000 tonnes of nickel pa.

Depending on the ore to be processed and what comes out the other end further refining to produce LME class 1 nickel may be required. If the plan is to produce nickel sulphate further processing would be required after that.

An HPAL plant would take several years to construct and commission and several years more to reach nameplate. This is a long way off and likely to cost several billion dollars with the promise, at most, of 60,000 tonnes of nickel sulphate and 5,000 tonnes of cobalt sulphate at the end of it.

The price of nickel, IMO, would have to shift north of its current price by at least 50% before an HPAL plant would be viable.

TDT


#141

Thanks