It looks like the uptake of EVs in China is set to slow down in H2.
This will undoubtedly negatively impact nickel in the immediate term.
Despite the slow down in EV sales in the USA this month and China last month nickel seems to be rather frisky today.
Off to a good start but will it break the long term down trend?
(Courtesy Geng on LSE).
It might take a few more goes before it does finally break the long term down trend but at least its having a good go this morning.
This is interesting.
The article state:-
“One projection suggests that the world EV fleet will increase to 13 million units by 2020…”
Up to the end of 2018 the global EV fleet was 5,308,247. In 2019 the number of EV sales is expected to be between 2.8m and 3.0m. If the above prediction is correct that means 2020 will see anywhere between 4.7m and 4.9m EVs sold. In other words CAGR for 2019 and 2020 is expected to be 53% and 58% respectively.
4.7m EVs is somewhere in the region of 188,000 to 235,000 tonnes of nickel, 4.9m EVs 196,000 to 245,000 tonnes of nickel.
This could be a brief run up if if this is the reason for this mornings action.
“…while Shanghai nickel prices hit a four-year high on renewed concerns of an export ban in Indonesia.”
This should ultimately put the brakes on.
“It (the trade war) is likely to weaken demand for base metal because China has retaliated today by allowing the Chinese yuan to weaken in line with the fundamentals,” said Jeff Ng, Continuum Economics’ chief economist for Asia."
It all depends on who is doing most of the buying I guess.
If this turns out to be a load of old pony…
“Some people said Indonesian may advance the ore ban from 2022 to this year. I’m not sure how true it is, but some investors will gamble on this to buy nickel,” said a nickel analyst."
…the price will unravel just as quickly. Watch this space.
“Nickel in London has jumped more than a third in 2019 and last month touched the highest in more than a year. Future battery demand will add further pressure on prices, according to Bradford, who is awaiting delivery this month of his own Tesla Model S.”
“The dramatic price rise we’ve seen will pale into insignificance compared to the future,’’ Bradford said in the Friday phone interview."
Demand for nickel from the battery supply chain is expected to double to 400,000 tonnes by 2025 from 200,000 tonnes this year, according to Wood Mackenzie, which is around 8 percent of the current global nickel market.
200.000 this year!!!
If we see 2.8m to 3.0m EVs sold in 2019 at between 40kg to 50kg of nickel per EV then demand will range between 112,000 tonnes on the low side to 150,000 tonnes on the up side of nickel. Wood MacKenzie’s estimate of 200k seems a bit optimistic but their prediction that 2025 will only see 400k tonnes is hilarious. Using the same metric that would mean anywhere between 8m to 10m EVs being sold globally in 2025. I’m expecting that number to be sold in 2025 in China alone.