Roskill: Multiple factors at play as the dynamic nickel market undergoes further transformation26 May 2021 21:52
Roskill: Multiple factors at play as the dynamic nickel market undergoes further transformation
The nickel market staged an impressive recovery since a COVID-19 low in March 2020 and the price rise was one of the strongest of all the base metals in 2020. This recovery was underpinned by strong stainless steel demand in China driven by a metals intensive stimulus package, in combination with resilient growth from the electric vehicle (EV) market.
May 25, 2021 10:02 ET | Source: Roskill Information Services Ltd
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London; UK, May 25, 2021 (GLOBE NEWSWIRE) --
The recovery led to the LME nickel price soaring to US$19,689/t by the end of February 2021. Despite the volatility characteristic of the nickel price, such an increase was counterintuitive given that the market remained in surplus throughout the majority of 2020. Market speculation, driven by concerns in some quarters of an impending shortage of nickel suitable for use in batteries, helped to fuel the bull narrative.
Step forward Tsingshan: a Chinese stainless steel major, which in March revealed that it would begin supplying 100kt (75kt Ni) high-grade nickel matte to Chinese battery cathode manufacturers Huayou (60kt) and CNGR Advanced Materials (40kt) over a period of a year, starting in October 2021. This matte will be based on converted nickel pig iron (NPI) from Tsingshan and Australian company, Nickel Mines Ltd’s operations at the Indonesian Morowali Industrial Park (IMIP) on Sulawesi, Indonesia. The announcement had the impact of trashing much of nickel’s recent gains, with the LME nickel price declining by over 8.5% on 4 March to US$15,945/t. Tsingshan now claims to have the capability to supply high-grade nickel matte on a regular basis and some future rotary kiln electric furnace (RKEF) lines are being constructed with matte converters to provide the optionality to target either stainless steel or battery markets, depending on demand. The company currently consumes NPI at its integrated stainless steel operation in Morowali as well as exporting material to China.
The reason for such a significant development in the market is that EV automotive manufacturers are opting for Li-ion batteries with increasingly nickel-rich cathode chemistries in order to boost the battery’s energy density and, subsequently, vehicle range on a single charge. Roskill forecasts that batteries’ share of primary nickel consumption will swell from 6% in 2020 to over a quarter by the end of the decade, making inroads on the dominant stainless steel market. Future availability of battery-grade nickel feedstocks has long been highlighted as one of the key pinch points in the battery supply chain. In addition to the quick fix solution offered by Tsingshan’s NPI-matte conversion deal, developments involving acquisitions and new project announcements over the past year are testament to the race to lock up long-term supply of the strategically important metal.
At the end of March 2021, Vale
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