Climbing nickel output to cast shadow on prices
Nickel production in China and Indonesia has soared to record levels this year, and it is expected that even if some projects are delayed, metal prices for stainless steel and electric vehicle batteries will be under pressure.
Nickel on the London Metal Exchange (LME)
Up 15% so far this year to 3-
With stocks falling and fears that Brazil\'s Vale could cut some of its production, the monthly high is $12,325 a tonne.
\"The current price change is a subconscious reaction to Vale news,\" said Kash Kamal, capital market analyst at BMO . \". (
LME nickel vs LME Index: tmsnrt. rs/2ShCtxC)
However, rising from lower output
Nickel grade cast iron (NPI)
Producers and high
Lead Acid (HPAL)
Factories, mainly in top Chinese and Indonesian producers, could drag prices down.
Analysts at Wood Mackenzie expect the expansion of the two Asian country smelters to lead to a 12% increase in NPI production this year to a record 840,000 tonnes.
\"The new level of supply announced comes from (HPAL)
The reasons for the long-term deficit and the gradual rise in nickel prices are now at risk, \"said Wood McKenzie.
The BMO Capital Market expects Indonesia, the world\'s largest producer of nickel, to grow 34% this year to about 777,000 tons of nickel and 850,000 tons in 2020.
China Qingdao group, PT Metro nickel, Shandong Xinhai technology and other manufacturers are planning to expand.
However, analysts doubt that a 50,000 can be completed in a timely manner-
Tsingshan and its partners in Indonesia are planning to start production this year. (
Png: production and consumption of nickel by tmsmrtrs/2ScwmdX)
It is estimated that the global nickel demand this year is about 2.
4 million tons.
The BMO Capital Market deficit is 129,000 tons and is expected to shrink to 96,000 tons in 2019.
But Citi analysts believe the market is balanced this year after the deficit reached 40,000 tons last year. (
Png: LME and SFHE stock for tmsnrt nickel. rs/2T7wado)
Citigroup analyst Oliver newkint says changes in cash discounts
The monthly contract is \"not in line with the market\'s consensus on a broader deficit \".
Due to sufficient supply and concerns in the market that LME registered warehouse inventory is declining, the current discount of $66 per ton has recently narrowed to $9 per ton.
Since the beginning of last year, LME inventory has dropped by 45% to 202,032 tons, while ShFE warehouse inventory is at its lowest level since October, at 11,357 tons. (
Tight nickel spread: tmsnrt. rs/2S4J9PO)
The ongoing trade dispute between the United States and China has also affected the price of nickel because China\'s stainless steel factories are the main consumers.
In addition, analysts said that part of the nickel bull market based on the stimulus of electric vehicles is still too early, stainless steel still accounts for about 2-
Demand is urgent.
The International Stainless Steel Forum said stainless steel production increased by 10% in the first nine months of 2018, but there were signs of slowing growth in the third quarter.
\"Nickel is still very stainless steel, and it\'s a macro story,\" says Citigroup\'s newkint . \".
\"Nickel will be in its heyday, but it may not be this year.