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LME Nickel Stocks

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#1489

Towards a nickel boom? It is still too early to say but the London market hopes that harmony will prevail over the differences at the G20 summit in Osaka. “Industrial metals need a peaceful environment, Caledonian nickel too, because commercial wars are weighing on human activity,” said Philippe Chalmin, expert and historian of raw materials, founder of the Cyclops circle.

star
In any case, metal is “the star of the London market” this week said Malcom Freeman, managing director of Kingdom Futures, an international merchant of the City. The sharp recovery in nickel prices is also due to a return of financial investors. The latter had sold their positions around 11,700 dollars per ton, before realizing their mistake. By buying nickel lots, they favored the rise of prices.

Koniambo
In London, earlier this week, the Metal Exchange was lacking vigor and direction. So, the temporary shutdown of a large nickel plant in New Caledonia has aroused the curiosity of analysts. Queries that were worth their rain dollars. Not that the incident at the Koniambo nickel plant was important, the market quickly rated it as secondary, but this Monday in June and in the heat of summer, traders did not have much others to put in their mouths. So we talked about New Caledonia in London before concluding that the incident in “Glencore plant” (Glencore north plant) as it is called in the City, was not enough to move the courses nickel.

batteries
On Wednesday, in any case, the factory of the North was already forgotten. It must be said that nickel was challenging the general concerns of other industrial metals because of its strong future prospects: “a raw material at the heart of the next electric vehicle revolution,” said Alastair Monro, an analyst with Trader Marex Spectron at the LME, for its part the agency Goldman Sachs added that "the market became aware of the boom in the potential demand for nickel offered by the revolution of electric batteries."

philippines
Against this optimistic backdrop, the announcement of a 500,000 tonne reduction in Global Ferronickel ore production in the Philippines was enough to boost metal prices. On Thursday, nickel reached an interim high of $ 12,375 per tonne, the highest since June 24. And since two pieces of information are better than one, the Australian bank Macquarie published a study by Jim Lennon, well known to industrialists in New Caledonia, indicating a drop of 41,000 tons in six months nickel stocks LME global warehouses. Good news that allowed the continuation of the rise in the price of metal, ie its “rally”, to use the term used by the Metal Bulletin.

G 20
On Friday, the market continued its momentum, the G20 talks reinforcing, rightly or wrongly, the optimism of the London Metal Exchange. Nickel traders are betting on positive developments for the global economy during the G20 summit in Osaka, Japan. Reasons to believe it? In any case, nickel was the most traded and demanded metal during Friday morning trading at the London Metal Exchange (LME).

Nickel price at three months at LME - 16H00 GMT - $ 12,747 per tonne ($ 5.78 per pound) + 0.12%. Over the week, nickel rose 5.20% and 19.34% since the beginning of the year.


#1490

Nuno

I’m not sure its in the interests of the likes of Nornickel or even CRU to publish accurate figures. Nornickel will not want the opposition to know their thinking and CRU will probably want people to pay for their research, they’ll not want to give it away for free.

I think the best approach is to work out the average for all the different figures published.

TDT :sunglasses:


#1491

https://seekingalpha.com/article/4272748-nickel-monthly-news-month-june-2019?app=1&isDirectRoadblock=true


#1492

LME data week from June, 24 to 28. Live Warrants started the week at 107.640 and ended at 103.884 Cancelled Warrants started the week at 61.236 and ended at 60.834
Opening Stocks drop 4.158


#1493

https://www.bloomberg.com/news/articles/2019-06-27/china-s-hydrogen-vehicle-dream-chased-by-17-billion-of-funding


#1494

#1495

This is well worth a read. Don’t forget to click on the embedded presentation by Michael Liebreich, founder of BNEF. A couple of comments he makes are worthy of particular note:-

“Between now and 2030 we are going to see a reduction in the cost of EV batteries by 70%.”

“By 2025 an EVs sticker price will be less than an ICE vehicles. By this date its game over for ICE.”

7 minutes and 45 seconds in listen to his comments on hydrogen.

TDT :sunglasses:


#1496

“Trump confirms US companies can continue to sell to Huawei”

Is this the start of Trump’s humiliating climb down in a desperate attempt to improve his chances of getting re-elected in 2020?

TDT :face_with_raised_eyebrow:


#1497

Sums things up perfectly.

TDT :sunglasses:

“The forecast is of course itself a moving target since there are so many individual moving parts to the equation. You may or may not agree with Goldman’s conclusions but the bank is right in highlighting nickel’s increasingly complex pricing mechanics.”

https://www.hellenicshippingnews.com/why-goldman-thinks-nickel-is-trading-like-a-biotech-start-up-andy-home/


#1498

#1499

TDT

Help me, What was the growth between 2017 and 2018?

Let us assume that it was 55%.

Using the CRU numbers, in 2017 70Kt were used.
If growth between 2017 and 2018 was 55%. ( it was more, I think so)

70Kt + 55 %% = 108.5Kt used in 2019, slightly different from the 134Kt Nornickel numbers.

Applying a growth of 48% to 2019 and neglecting the increased use of nickel in batteries.

105Kt + 42.08% = 149KtKT required for 2019,

If we do not neglect the technologies of nickel-rich batteries, we will surely use in 2019 about 200Kt


#1500

Nuno

CRU claim 70k in 2017 whereas Nornickel claim 134k in 2018. That’s YoY increase of 91%.

The extract I posted yesterday from a Bloomberg piece on Nickel:-

“The forecast is of course itself a moving target since there are so many individual moving parts to the equation."

The above sums up the difficulty you will experience trying to put anything accurate on forward looking projections. That doesn’t mean to say we shouldn’t try.

If nickel use in 2017 was 70k tonnes and we have a CAGR of 55% going forward the figures would look like:-

2017 - 70,000
2018 - 108,500
2019 - 168,175
2020 - 260,671

As you’ve probably figured out from some of my previous posts this sort of thing is something I like to do. I’ve done a whole series of projections for EV adoption rates and battery prices going forward. There’s no guarantees with this methodology but in the absence of anything better its the best we’ve got.

On a different but connected note the figures published earlier this year by BNEF for the cost of batteries from 2010 to 2018 gave us a snap shot of how things have progressed since the start of the current decade. The % reduction from year to year varied but when averaged out it turned out to be exactly 21% a year. The surprising thing is a recent BNEF article I believe you posted recently claimed that the cost of producing batteries had fallen from 2018 to 2019 by exactly 21%. Past performance is no guarantee of future performance but in the absence of anything else its a fair metric to use.

Working on the basis of 134k in 2018 and a YoY increase of 55% you end up with 207,700 tonnes of nickel for this year. Given that I’m not convinced by Nornickels 134,000 tonnes for 2018 I’m equally unconvinced by 207,700 tonnes for 2019. The only thing I can think of that would substantiate 134,000 tonnes for last year is a significant proportion of that figure ending up off market. As Andt Home suggested in his recent article:-

“Goldman argues that a significant part of what left the LME last year went to off-market build in Europe with the flow switching to the Middle East in the first quarter of this year.”

Whatever figures eventually get published by various bodies for 2019 you can bet there will be a fairly wide margin.

TDT :sunglasses:


#1501

Nuno

You might find this of interest.

“Energy Disruptors: UNITE 2018 Michael Liebreich - Bloomberg New Energy Finance - opening speech”

TDT :sunglasses:


#1502

#1503

Nuno

This BNEF report states:-

_“While there may be short-term fluctuations, we continue to expect further decreases in battery prices, falling from $176/kWh at the pack level today to $87/kWh in 2025 and $62/kWh in 2030.”

The $176/kWh figure quoted is for 2018. If battery costs are going to hit $87/kWh in 2025 from the projected 2019 price level of $139/kWh then prices need to fall YoY by only 7%. I think it highly unlikely that the price reduction in the cost of producing batteries is going to slow down to that level. I think it more likely we are going to see $87/kWh as soon as 2023 with $62/kWh by 2025. I think BNEF is being far too cautious.

TDT :sunglasses:


#1504

This is a good read.

TDT :sunglasses:


#1505

“Nickel price was so strong last week due to short position squeeze for ShFE July contract. Most investors already closed their position before July 1, so the buying activities came down (this week),” said a China-based nickel analyst.

“Lots of investors have been shooting nickel price since March, as the nickel pig iron production is so high while the stainless steel market is not good,” the analyst added.


#1506

SHFE nickel prices led on the downside during morning trading on Monday after stocks of the metal rose by 3,208 tonnes, or 19%, to 20,464 tonnes on June 28. This compares with 11,101 tonnes at the start of June.

https://www.metalbulletin.com/Article/3881616/Search-results/LIVE-FUTURES-REPORT-0107-US-China-trade-truce-buoys-SHFE-copper-prices-nickel-down-15-on-rising.html


#1507

http://www.chinadaily.com.cn/a/201907/01/WS5d195da7a3103dbf1432b1c2.html


#1508

LME down by 3,060 tonnes today. I have a funny feeling that’s going to reverse later on this week.

TDT :sunglasses: