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Fact Sheet
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Demand growth, falling stocks boon for Ni
- Healthy growth in nickel demand from the stainless steel and battery sectors and shrinking inventories on the Shanghai Futures Exchange and London Metal Exchange bode well for nickel prices
- Nickel inventories at both LME and SHFE warehouses have been on a downward trajectory since 2018
- Stainless steel demand still dominates, but EV sector grows faster
By: Violet Li
Healthy growth in nickel demand from the stainless steel and
battery sectors and shrinking inventories on the Shanghai Futures
Exchange and London Metal Exchange bode well for nickel prices,
Macquarie Capital senior commodities consultant Jim Lennon said.
“Our view is that we have these two drivers in demand: stainless steel
and batteries, and nickel inventories have been falling over the last
few years. I think it will [continue to] fall over the next few years;
the nickel market will remain in a deficit between supply and demand,
which should push prices higher,†Lennon said at Fastmarkets Battery
Materials Conference in Shanghai on Thursday April 11.
Lennon did not give a breakdown of the forecast price at the presentation.
Nickel inventories at both LME and SHFE warehouses have been on a
downward trajectory since 2018. LME nickel stocks totaled 182,446 tonnes
as of April 1, down by 50% from 368,430 tonnes on January 1, 2018.
Meanwhile, nickel stocks in SHFE-approved warehouses fell by 80% during
the same period, to 9,749 tonnes on April 4 from 48,920 tonnes on
January 1, 2018.
Lennon concluded the large decline in stock levels reflects deficits and some financial buying of stocks.
“Last year there’s probably about 50,000 tonnes of inventories
transferred from the LME warehouses in Asia into non-reported
inventories in Europe, held by banks and traders, partly for reasons of a
positive outlook for the market or better premiums in the European
area,†Lennon said.
Stainless steel demand still dominates, but EV sector grows faster
Stainless
steel takes up 70% of global nickel usage compared with a small
fraction of 6% of nickel used by the electric vehicle (EV) sector,
Lennon said. But EV demand growth is speeding up, he said.
“Total world production of stainless steel in 2016 grew by 8.5%, 2017 by
6% and last year by 5%. This year, our projection is 3.5-4%, so we do
see some slowdown but still a steady growth rate. Nickel usage in
batteries will grow by 30-40% [in 2019], so the underlying growth in
nickel [consumption] continues to be quite impressive,†Lennon said.
Notably, more nickel briquette was used in the EV sector following
rising demand for batteries and this has raised the nickel briquette
premium over the past year.
Fastmarkets MB’s monthly duty-free
nickel briquette premium cif Shanghai stood at $240-270 per tonne at the
end of March, up from $220-260 per tonne at the launch of the
assessment in August last year.
Nickel briquette is the one of
the main raw materials of nickel sulfate, a key material used in the
production of nickel-cobalt-manganese (NCM) and nickel-cobalt-aluminium
(NCA) batteries used in EVs.
Source: https://www.amm.com/Article/3868517/Demand-growth-falling-stocks-boon-for-Ni.html