This kind of sums it up.
“Even at the current price, projects outside of Indonesia are still short of an incentive level for economic viability which Roskill puts at over US$20,000/t but, in reality, needs to be higher. If the price continues to creep up, however, shuttered or lower-cost capacity may be incentivised to re-open, even though Roskill considers that additional nickel units aren’t necessary in the immediate future to balance demand growth, given that on and off-market stock levels and output are sufficient to meet short-term Class I (including nickel sulphate) requirements. A nickel price spike now may not reflect the reality of the market balance, but if it continues and is sustained, may be a blessing given the timeframe to production of new supply to meet higher demand—led by EVs—in the future.”
China data: Latest data from China’s National Bureau of Statistics shows that softer prices and trade-related concerns have been having an impact on metals output in the country. Chinese crude steel production fell 6% MoM to 2.75mt/d in July, as poor margins pushed steel mills to optimize operating rates. Aluminium output softened from 99.1kt/d in June to 96.1kt/d in July. On the other hand, NPI output rose to a fresh record of 52.3kt in July, up 38% YoY (7.1% MoM) on healthy nickel prices and higher raw material imports.
Meanwhile, the demand-side continues to be a concern, with industrial output softening to 4.8% in July - the weakest growth in over a decade, and retail sales softened to 7.6%, only marginally higher than the low of 7.2% in April.
Tariff delay: The announcement provided somerelief to markets as the US administration aims to cap consumer goods prices ahead of the holiday season. The news saw risk appetite returning to markets, while we saw a sell-off in safe haven assets, such as gold."
This is the point where Trump pulls back and tries to claim credit for bringing the Chinese to the table and for rescuing the American economy, all in preparation for the 03/11/2020 election.
“The U.S. and China are, much to the relief of markets, making moves to step back from the brink of an all-out trade war. President Donald Trump delayed the imposition of new tariffs on a wide variety of consumer products including toys and laptops until December. Chinese officials are sticking to their plans to visit Washington in September for face-to-face meetings, according to people familiar with the matter. Whatever the chances of a positive outcome, investors have welcomed the pause in escalations from both sides.”
I wonder what this means for nickel?
“* “A meaningful trade deal is unlikely to be reached before the next US Presidential elections in late 2020. We expect most base metal prices to remain weak over the coming months… with the exception of nickel which continues to show resilience due to supply-side fears in Indonesia,” Fitch said in a note.”
That’s not as predicted.