We have two drivers in
[nickel] demand: stainless steel and batteries, and nickel inventories have
been falling over the last few years, Macquarie Capital senior commodities
consultant Jim Lennon, told delegates at Fastmarkets Battery Materials
Conference 2019 in Shanghai.
I think it will [continue to]
fall over the next few years; the nickel market will remain in deficit, which
should push prices higher, Lennon said, without giving a breakdown of forecast
prices.
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, 2019, down by 50% from 368,430
tonnes on January 1, 2018. Nickel stocks in SHFE-approved warehouses have
fallen by 80% over the same period to 9,749 tonnes on April 4 from 48,920
tonnes on January 1, 2018.
Lennon concluded the falls
reflect deficits and some financial buying of stocks. Last year theres
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 the EV sector is growing at a faster pace. Stainless steel takes
up 70% of global nickel usage, compared with 6% used by the electric vehicle
(EV) sector, according to Lennon.
But EV demand growth is
speeding up, he said.
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.
More nickel briquette was used
in the EV sector, following rising demand for batteries, raising the nickel
briquette premium over the past year.
Fastmarkets MBs monthly
duty-free nickel briquette premium cif Shanghai stood at $240-270 per tonne at
the end of March 2019, 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.
Jim will be speaking at the 7th
International Nickel Conference - register
today and don't miss out on hearing about Indonesia's future dominant
role in nickel's growth, HPAL investment and regional stainless steel
production.