1. Nickel prices skyrocketed on the expectations of a shortage on the global market provoked by the increase in demand that outpaces the supply growth. The rebound in the steel industry and rising electric vehicle manufacturing drive nickel consumption.
2. Indonesia, the largest nickel ore producer worldwide, banned exports of the ore and thus achieved a record output of refined nickel.
3. Indonesia, the leading global producer of nickel ore, reduced its volume of mine production from 853К to 760К tonnes, banned the export of unprocessed nickel ore and increased the refined nickel production to 636K tonnes.
4. According to World Bank, the average nickel price in the first half of 2021 reached $17,489 per tonne, which was 27% higher than the 2020’s average price of $13,787 per tonne.
5. Rising demand from the recovering steel industry and from emerging electric car manufacturing provokes the price rally, while the supply is expected to be insufficient in the immediate term due to a decrease in the mined output.
GLOBAL DEMAND
1. In the first half of 2020, global demand for nickel decreased, following the pronounced slump in steel output.
2. From Q3 2020, it started to recover, driven by the Chinese and Indonesian stainless steel and nickel pig iron sectors.
3. Thanks to this, global refined nickel production grew by 2% in 2020, with the use of recycled nickel enabled to offset the shortage of mined ores.
4. Indonesia should to emerge as the largest refined nickel producer worldwide, displacing China from the current leader’s position.
5. Demand from growing stainless steel production will be the main driver of the nickel market in the medium term. Another impact comes from the rapid expansion of the electric vehicle industry. New types of energy-efficient electric vehicle batteries that are being developed use a higher nickel content in the cathode, which will accelerate the consumption growth in this industry.
6. The countries with the highest volumes of refined nickel production in 2020 were China (725K tonnes), Indonesia (636K tonnes) and Russia (236K tonnes), together comprising 61% of global production.
7. From 2012 to 2020, the most notable rate of growth in terms of refined nickel production, amongst the leading producing countries, was attained by Indonesia (+55.7% per year), while nickel production for the other global leaders experienced more modest paces of growth.
GLOBAL REFINED NICKEL IMPORTS
1. China represented the largest importer of nickel in the world, with the volume of imports accounting for 214K tonnes, which was approx. 31% of total imports in 2020.
2. The U.S. (90K tonnes) held the second position in the ranking, followed by Germany (57K tonnes), the Netherlands (37K tonnes) and Japan (32K tonnes). All these countries together took near 31% share of total imports.
3. The following importers – India (31K tonnes), Italy (30K tonnes), South Korea (27K tonnes), Taiwan (Chinese) (24K tonnes), Sweden (20K tonnes), Belgium (16K tonnes), Austria (15K tonnes) and Spain (14K tonnes) – together made up 26% of total imports.
4. In value terms, China ($2.7B) constitutes the largest market for imported nickel worldwide, comprising 29% of global imports. The second position in the ranking was occupied by the U.S. ($1.2B), with a 13% share of global imports. It was followed by Germany, with an 8.1% share.
INDONESIA BAN NICKEL EXPORT
1. China's Tsingshan Group, a self-proclaimed disruptor of both the stainless steel and nickel industries, poured a bucket of cold water over the market's EV dreams in March, when it said it intended to produce battery-grade material from nickel matte.
2. This would effectively close the processing gap between the sort of nickel used by the stainless steel industry and that used for lithium-ion battery production.
3. Where Tsingshan is leading, others are following as the Indonesian government tries to build out an EV materials supply chain from its abundant nickel resources.
4. Timelines to commercial production and costs are highly uncertain. So too is the carbon footprint of the technology required to complete the ore-to-sulphate processing route, which is a big potential problem for an input into a green product, such as an electric vehicle.
5, The country has embarked on a giant nickel processing experiment, which if successful would fuse the nickel chemistry split between battery and stainless steel applications. That in turn would undermine the bull argument that prices must rise to incentivise more production of the "right" type of nickel.
CHINA STILL EXPORTING NICKEL ORE FROM INDONESIA DESPITE EXPORT BAN
1. Indonesia remained China’s second-biggest nickel ore supplier in 2020, Chinese customs data showed on Wednesday, despite the Southeast Asian country’s ban on exports of the material.
2. Arrivals of Indonesian nickel ore into China totalled 3.4 million tonnes last year, the General Administration of Customs reported. That was down 85.8% from 2019 but still second only to the Philippines at 31.98 million tonnes, and ahead of New Caledonia in third.
3. Data from Indonesia, which enacted the ban to force more ore domestic ore processing, shows zero nickel ore exports to China for January to November.
4. China’s customs administration and an Indonesian mining ministry official did not provide an explanation but some analysts believe the answer may lie in material being exported as iron ore but imported into China as nickel ore.
5. These shipments typically consist of ore that has only around 1% nickel content but over 50% iron, so is iron ore as far as the Indonesia government is concerned
6. Some stainless steel firms in China then declare it as nickel ore at customs. They can mix the ore with some other grade, then produce low-grade nickel pig iron which is used to make stainless steel,
Source:
https://www.globaltrademag.com/nickel-prices-shoot-up-due-to-supply-lagging-behind-robust-demand/
https://www.reuters.com/business/energy/indonesia-puzzle-nickels-competing-narratives-andy-home-2021-04-30/
https://www.reuters.com/article/china-economy-trade-nickel-idUSL4N2JP36N
