commentary: why electric vehicles could fracture the nickel market

LONDON (Reuters)-
Earlier this year, China\'s Ministry of Finance made some minor but significant adjustments to its nickel import tariffs.
Import tax of melting
From 1% to 2%, the grade nickel cathode is doubled, while the grade of nickel sulfate is from 5.
5% to 2%.
Why differentiate?
The reason is that nickel sulfate is a metal form that is very suitable for the production of pioneer battery materials.
China is already the leader of electric vehicles (EV)
The battery industry is clearly laying the foundation for stimulating the import of nickel, the most easy-to-use component of lithium
Ion battery treatment.
According to the International Nickel research group, batteries remain a relatively small part of nickel use, accounting for about 4% of global demand.
But everyone knows that this proportion will only increase as the electric car revolution is gaining momentum.
However, as it does, it may break an already broken market in terms of supply chain and pricing.
Most nickel production in the world
About 70%-
Alloy input for stainless steel production.
The type of nickel used for stainless steel production has historically been arranged in ascending order of price, stainless steel scrap, nickel iron and refined metal.
But China has launched a material revolution in the past decade or so in response to an astonishing bull market where nickel prices reached more than $50,000 a tonne in 2007.
To find cheaper alternatives, they found a technology that was never developed, namely, nickel cast iron (NPI).
This explosion in the form of metal has already occurred.
The impact was profound, including new nickel ore supplies in Indonesia and the Philippines. in 2016, NPI production and even stainless steel production moved to Indonesia, and nickel prices plunged to less than $10,000.
Producers of more traditional types of nickel are still trying to adjust.
At the end of last year, Vale, the world\'s largest producer, decided to seal production capacity.
The existing dynamics of nickel, although in line with the needs of stainless steel manufacturers, but for the electric vehicle industry, it is very problematic.
Most of the current production growth in the world occurs in the NPI segment of the market.
Compared with 2 tons of global refining output, NPI production is expected to reach 700,000 tons this year.
According to Wood Mackenzie, 8 million tons in 2017 (
\"Nickel: Five things to find in 2018\", January 2018).
Global mine production will grow by more than 10% this year, but almost all of this will come from Indonesia and the Philippines and be shipped to NPI for processing in the form of nickel ore, the research agency said.
The problem is that none of these materials are suitable for the production of nickel sulfate powder needed by the battery manufacturer.
It is not impossible to convert NPI into sulfuric acid, but it is neither economical nor logical.
So, citing Wood Mackenzie, the battery uses \"about half of global nickel production is not available \".
However, due to the price impact of the NPI boom, the motivation to build a new capacity to produce suitable nickel simply does not exist.
London Metal Exchange (LME)
The price of nickel today is around $13,000.
This is an improvement on the submarine.
The continuing $10,000 pricing for the first half of 2016 and 2017.
But, as Vale has shown, it is still a pricing environment in which established producers are likely to shut down existing production capacity to bring new operations.
This is the biggest headache ever.
The growing electric vehicle market in the nickel market.
In fact, this is a double problem for battery manufacturers, because the low nickel price also hinders the production of new cobalt, another key lithium-
Ion battery input.
In addition to the African copper belt, cobalt is often a by-product
Products in nickel deposits.
During the market downturn in 2015 and 2016, many miners with smaller deposits of this type closed, and the nickel price did not fluctuate enough to revive any of them.
Figure on the nature of LME nickel inventory changes: tmsnrt.
Rs/2FiS1f3 future demand for nickel sulfate will only intensify the existing structural tension between different types and chemical nickel.
This is the essence of these things.
It has so many different varieties that the tradable goods are constantly formed --shifting.
London Metal Exchange (LME)
Contracts, for example.
Although the physical transport standards of the exchange are consistent in terms of minimum purity and impurity levels, they allow for a wide variety of shapes, from particles to coal balls to the cutting cathode.
LME decided to make full of two Russian brands-
Since Nornickel no longer produces plate nickel, it is understandable that plate nickel has changed the nature of the contract. Russian full-
In the past, almost all of the LME stocks have been shipped to China, where it can still pass through the Shanghai Futures Exchange (ShFE). Full-
Plate Nickel currently accounts for less than 20% of the total registered inventory.
In contrast, the inventory share of bagged coal balls rose from zero in early 2012 to 79%.
The upcoming electric car revolution opens up a new split between metal form and chemical form nickel.
Since battery manufacturers have to extract additional units from stainless steel or super batteries, the premium for chemical nickel has changed
Alloy Process Flow
The obvious result is that the nickel market will split into two different entities, and LME has indicated that it is considering the launch of a new nickel sulfate contract.
By the way, the exchange is also studying the cobalt sulfate contract for exactly the same reason.
Because at present, the \"nickel market\" is still in sync with the traditional stainless steel demand base.
The base is actively opposed to the effective development of a separate supply chain stream to meet battery needs.
Tensions have been rising.
The story of an electric car is a powerful, slow
Burn money due to rising nickel prices.
The price of nickel sulfate is not the price of nickel and iron.
The opinion expressed here is the opinion of the columnist of Reuters.