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BHP Commentary and Outlook for Nickel-The 21st China(Guangzhou) Die-casting, Foundry & Industry Furnace Exhibition
3/3/2020 Die-casting expo-foundry expo |
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Global mining giant BHP said “Nickel prices ranged from USD 12,025 per tonne to USD 18,625 per tonne over the first half of the financial year, averaging USD 15,495 per tonne. The major influence on price for much of the period was uncertainty about the direction and impact of Indonesia’s nickel ore export policies. Firstly, there was uncertainty whether the timing of the ban would be brought forward, and if so, how abruptly. And once there was clarity on the first point, it was uncertain how exports might be policed in the period between the announcement in September 2019 and the inception of the ban in January 2020. Third, it was uncertain to what extent the ban, once enacted, would disrupt the various value chains that emanate from mined nickel ore in calendar 2020 and beyond.
Prices were understandably volatile against this backdrop – and other fundamentals were not standing still either. The 2020 calendar year opens with large precautionary nickel ore stocks at Chinese ports as the result of a result of a sprint to procure supply in advance of the ban. There is also a sizeable build–up of finished stainless steel stocks sitting with Chinese producers. Clearing both stock positions will take time. The impact of the Covid–19 outbreak is expected to delay the re–start of the stainless steel consuming end–use sectors that would ordinarily consume the finished stocks; and while those stocks are abundant, nickel pig iron (NPI) producers have little incentive to run at high utilisation rates.
An additional factor to consider for the year ahead is that the structural implication of the Indonesian ore export ban is that the archipelago will become the world’s clear #1 producer of NPI essentially “overnight”, displacing China, and dramatically reshaping industry trade flows.
Nickel “first–use” is dominated by the stainless steel sector. It comprises more than two–thirds of primary demand today. Nevertheless, with a rapid and prolonged drive towards the electrification of transport in prospect, we contend that there are plausible long run paths where batteries and stainless steel will become equally important consumers of nickel, in a much bigger global market.
Even a mega trend can have a bad year or two along the way. Calendar year 2019 was just that for electric vehicle (EV) battery manufacturers, with the large reduction in Chinese purchasing subsidies at the end of June leading to a sharp correction in EV sales, and a large, unintended build–up of inventory with auto dealers. The pain of this adjustment was spread throughout the value chain. It clearly had a negative impact on the profitability of the battery producers and their immediate suppliers, many of whom are in the midst of aggressive capacity expansion phases.
While batteries are only about 6 per cent of total nickel demand today, and are thus not yet particularly influential in setting base prices, batteries are vital for the nickel sulphate premium over nickel metal. This premium fell sharply in the Chinese spot market during the unusual combination of high base Nickel prices and weak EV demand seen at the peak of the ore ban sentiment disruption. In the rest of the world, contract pricing remained quite steady, and Chinese spot prices have also reclaimed some dignity of late. Our review of developments in the EV market is here.
There are three key questions for the nickel market in the longer run. The first is how fast will electric vehicles penetrate the auto fleet? The second is what mix of battery chemistries will power those vehicles? The third is what will be the “steady state” marginal cost of converting the abundant global endowment of laterite ores to a high grade nickel product suitable for use in battery manufacturing?
You can read our views on the first two questions here and here respectively. On the third question, the signposts have been mixed, and in our minds, it will be a considerable time before there is real clarity in this domain.”
壓鑄展-鑄造展-2020第二十一屆廣州國際壓鑄、鑄造及工業(yè)爐展覽會-中國最受關(guān)注的壓鑄鑄造展會-巨浪展覽
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