Sudbury strike, Indonesia lockdown jolt nickel prices
Supply concerns are pushing up prices across the global nickel complex, as strike action at Vale's Sudbury mine in Ontario dents regional pellet availability and drives up competition for briquettes, while simmering concerns about Indonesia's latest Covid-19 lockdown push the LME three-month (3M) contract to its highest level since 25 February.
Industrial action began at Sudbury on 1 June and market participants are concerned that it could drag on as negotiations stumble, particularly as strikes elsewhere in the regional metal industry have sometimes lasted for months.
Sudbury is one of the world's few producers of nickel pellets and the temporary loss of its output is pushing more consumers to switch to battery-grade briquettes. Nickel stocks in LME warehouses, which are dominated by briquettes, stood at 229,980t yesterday, down from 231,498t a week earlier and their lowest level since April 2020. US briquette premiums rose to 35-37¢/lb yesterday, up from 25-27¢/lb a week earlier.
As briquette supply tightens, some end-users might consider switching to other nickel products, such as cathodes, for which prices are already rising as concerns build. US premiums for full truckload melting grade 4x4inch cathodes were assessed at 35-40¢/lb yesterday, up from 30-35¢/lb a week earlier. Premiums for full truckload plating grade 1x1inch cathodes were assessed at 60-65¢/lb, up from 50-60¢/lb.
Indonesia's Covid-19 surge triggers price hikes
The LME 3M nickel contract had a choppy start to July (see chart), lurching between just under $18,100/t and just over $18,500/t amid various signals from the US Federal Reserve, concerns about Chinese economic growth and exchange rate movements. But today the contract jumped decisively higher, to $18,684/t from $18,190/t yesterday, as Indonesia's latest lockdown restrictions fuelled fresh supply concerns.
It remains to be seen how the pandemic's latest surge actually affects physical volumes, with one broker noting that Indonesia's nickel mining sites are so remote that there has only been a limited impact during previous similar scares.
But the impact on prices has been building through the week, contributing to a rise in China's domestic nickel pig iron (NPI) prices yesterday — up to Yn1,210-1,240/mtu ex-works from Yn1,200-1,220/mtu ex-works a week earlier — and leading to a surge in open interest on the Shanghai exchange over the past 24 hours.
Overall, Indonesia's mined nickel production slipped to 760,000t in 2020 from 853,000t in 2019 amid Covid-19 disruptions, according to industry data. But volumes are still up significantly compared with 345,000t in 2017 and multiple new project developments are expected to push up the country's output significantly in the medium-term, such as PT Huayou Nickel Cobalt, PT QMB New Energy and Morowali Huayue Nickel and Cobalt.
The global demand outlook is strong — particularly from the battery industry — but Indonesia's anticipated ramp-ups, combined with other production hikes planned by suppliers such as Russia's Nornickel, are fuelling expectations that the global nickel market will tip further into oversupply from 2022, potentially weighing on prices.
As of June, investment bank Macquarie estimates a global nickel surplus of 7,000t in 2021, as compared with a 19,000t deficit in 2019. The bank expects this surplus to rise to 193,000t in 2023 and then narrow to 71,000t in 2025.
"We still foresee surpluses through to 2025 but now see some discipline from Chinese investors in bringing on new capacity since there will be excess supply of NPI/ferro-nickel over the next few years," Macquarie said, adding that "while risks to nickel's near-term price are to the downside, a strong post-virus global economic recovery story, combined with large-scale Chinese NPI closures in 2021, could see current prices hold for longer than medium-term fundamentals justify".
China nickel sulphate hits $4,000/t
Looking across to China, restocking activity from the battery and stainless steel industries continues to push prices higher across the nickel suite. The nickel sulphate market has been rising particularly sharply, with Argus' cif China nickel sulphate assessment hitting the $4,000/t threshold earlier this week, up from around $3,450/t cif China on 1 June (see chart).
Import demand is particularly strong because of domestic supply tightness, underpinned by a shortage of mixed hydroxide precipitate (MHP) — an intermediate product needed for nickel sulphate production. Market participants have been hoping the MHP shortage will ease a bit after Lygend began operations at its nickel-cobalt project on Indonesia's Obi island in late May. The first 5,500t of MHP were due to arrive in China in late June. It remains to be seen if Indonesia's latest Covid-19 surge will have any impact on the Obi project's operation and exports.
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Lynas to produce heavy rare earths in Malaysia by 2025
Lynas to produce heavy rare earths in Malaysia by 2025
Beijing, 28 June (Argus) — Australia-listed mining company Lynas Rare Earths plans to start producing two separated heavy rare earth (HRE) products at its Malaysian facility by 2025. Lynas will start production of separated dysprosium and terbium at one of Lynas Malaysia's solvent extraction circuits in 2025. The facility is designed to separate up to 1,500 t/yr of a mixed heavy rare earth compound containing mixed samarium, europium, gadolinium, holmium, dysprosium and terbium (SEGH). The HRE project has completed initial engineering and detailed engineering design is underway, with commissioning and ramp-up expected in mid-2025. Lynas' HRE product range will increase to five products — dysprosium, terbium, unseparated samarium/europium/gadolinium, holmium concentrate and unseparated SEGH — after the separation of dysprosium and terbium from the SEGH compound. Dysprosium and terbium are needed to produce high-performance rare earth magnets, which are used in consumer electronics, electric vehicle engines and other automotive applications. Lynas is also progressing pre-construction activities for its planned rare earth processing facility in the US. Its facilities in Malaysia and the US have been designed to accept third-party feedstocks once they start operations. The heavy rare earths production provides a pathway to accelerate Lynas' commitment to processing all of the elements at the firm's Australian Mount Weld ore site, said Lynas' chief executive officer and managing director, Amanda Lacaze. Supply chains More national governments have been taking action to build or diversify more resilient and sustainable rare earth supply chains, to keep up with a fast-evolving clean energy transition and reduce their heavy reliance on China-origin supplies. China is the largest supplier of medium and heavy rare earths in the world, and it has been implementing stricter export control policies for rare earth extraction and separation technology. There is limited progress on the development of rare earth projects outside China, especially in the HRE market, mostly because of exploration technique restrictions, ore resource shortages, production costs and capital pressure and environmental consideration and so on. US-based rare earth producer MP Materials aims to develop a facility to produce HREs in the next few years. It has started neodymium-praseodymium oxide production since the third quarter of last year and targets commercial production of finished magnets by late 2025. Australian mineral producer Iluka Resources plans to achieve an output capacity of up to 23,000 t/yr of rare earth oxide, including 5,500 t/yr of neodymium-praseodymium oxide and 725 t/yr of dysprosium and terbium oxide from its refinery in Australia. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
China, EU launch talks ahead of EV provisional duties
China, EU launch talks ahead of EV provisional duties
Beijing, 28 June (Argus) — China and the EU have launched talks on the EU's anti-subsidy investigation on battery electric vehicle (EV) imports from China ahead of the planned start of provisional duties for early next month, according to China's ministry of commerce. The European Commission on 12 June announced provisional duties on Chinese battery EV manufacturers, setting an additional rate of 17.4pc for BYD, 20pc for Geely and 38.1pc for SAIC, as well as 21pc for other producers that co-operated in the investigation, from the current 10pc duty. "Minister Wang Wentao held video talks with the European Commission's executive vice-president and trade commissioner Dombrovskis on 22 June," said the ministry's spokesperson He Yadong. "The working teams of the two sides have maintained close communication and stepped up consultations." When asked for comments regarding industry discussions on whether the two sides are likely to set minimum import prices and volumes to replace the duties, similar to the approach taken in the EU-China photovoltaic dispute in 2013, He Yadong did not answer directly, saying "We hope that the EU will push for positive progress in the consultation as soon as possible and reach a solution acceptable to both sides so as to avoid the adverse impact of escalating trade frictions on China's and EU's economic and trade relations." The European Commission said on 12 June that if talks with the Chinese government do not lead to an "effective" solution, the provisional countervailing duties will start from 4 July and definitive duties would be published before November, it said. China's main economic planning agency the NDRC on 17 June said the EU's punitive duties on battery EV imports from China will increase the EU's dependence on fossil energy . But many industry participants remain hopeful that the duties can be negotiated down via the talks before the duties are imposed. The EU, China's largest trade partner since 2020, has introduced more protectionist moves against China in recent years, especially in the EV and battery raw materials sectors, including anti-subsidy duties on EVs and the Critical Raw Materials Act. China's exports of battery EVs to Europe fell by 15pc in January-May from a year earlier and by 22pc in May, according to data from the China Passenger Car Association (CPCA). Exports to main European destinations during January-May consisted of 115,318 units to Belgium and 67,956 units to UK. Chinese EV producers complained that the EU was requiring them to provide far more information than they needed for an anti-subsidy investigation. "Chinese EV and battery companies were required to provide information such as their battery components and chemical formulations, EV production costs, EV parts and raw material procurements, sales channels and pricing methods, customer information in Europe, and their supply chains," He Yadong said. China has taken up more than 60pc of the world's EV sales, driven by its decarbonisation targets and ambition of making up for its slower development of internal combustion engine vehicles. But it is facing more geopolitical restrictions from the US, EU and some other western countries. The US has raised its duty on China's EVs to 100pc from 25pc. Canada will also launch a consultation on 2 July for a potential punitive duty on China's EVs. Turkey has also imposed a 40pc duty on all Chinese vehicle imports. China exported 519,000 new energy vehicles during January-May, up by 14pc from a year earlier, according to data from the China Association of Automobile Manufacturers (CAAM). But exports in May fell by 9pc from a year earlier and by 13pc from the previous month to 99,000. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
US House panel advances waterways’ projects bill
US House panel advances waterways’ projects bill
Houston, 27 June (Argus) — A Congressional committee on Wednesday advanced a bill to authorize a bundle of US port and river infrastructure projects for the US Army Corps of Engineers (Corps). The Water Resources Development Act (WRDA) biennially authorizes projects handled by the Corps' civil works program aimed at improving shipping operations at the nation's ports and harbors, and along the inland waterway system. The traditionally bipartisan legislation also approves flood and storm programs, and work on other aspects of water resources infrastructure. The House of Representatives' Transportation and Infrastructure Committee on Wednesday passed the bill by a 61-2 vote. The Senate Committee on Environmental and Public Works passed its own version of the bill on 22 May by a 19-0 vote. Neither the full Senate nor House have yet voted on the bills, which will need a conference committee to sort out different versions. A key difference is that the House bill did not include an adjustment to the cost-sharing structure for lock and dam construction and major rehabilitation projects. The Senate measure adjusted the funding mechanism so that 75pc of costs would be paid for by the US Treasury Department's general fund, with the rest coming from the Inland Waterways Trust Fund. The 2022 version of the bill made permanent an increase to 65pc from the general fund and 35pc from the trust fund, which is funded by a barge diesel fuel tax. The House committee's decision not to include the funding change drew disappointment from shipping interests. The Waterways Council was "disappointed that the House did not include a provision to modernize the inland waterways system", but was hopeful that conference negotiations would result in its inclusion, Tracy Zea, chief executive of the group, said. The latest House version of the bill authorizes 12 projects and 160 new feasibility studies. Among the projects receiving approval were modifications to the Seagirt Loop Channel near the Baltimore Harbor in Maryland. The federal government would pay $47.9mn towards an estimate $63.9mn project to widen the channel, which would help meet future demand for capacity within the Port of Baltimore. That would include increased container volume at the Seagirt Marine Terminal. The project was in the works before the 26 March collapse of the Francis Scott Key Bridge temporarily diverted freight from Seagirt and many other port terminals. The committee also authorized $314.25mn towards a resiliency study of the Gulf Intracoastal Waterway. The study would consider hurricane and storm damage and identify ways to improve navigation, reduce the maintenance requirements, and provide resiliency. The waterway connects ports along the Gulf of Mexico from St Marks, Florida, to Brownsville, Texas. The House version of the bill also includes provisions to strengthen flood control, wastewater, and stormwater infrastructure. "Critically, WRDA 2024 will help communities increase resiliency in the face of climate change," representative Rick Larsen (D-WA) said. By Abby Caplan and Meghan Yoyotte Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Bolivia coup attempt exposes instability
Bolivia coup attempt exposes instability
Montevideo, 27 June (Argus) — Bolivia's government quickly thwarted an attempted coup on Wednesday, but the military action deepened the country's economic and political problems. President Luis Arce fired the commander of the joint chiefs of staff, army general Juan Jose Zuniga, who was subsequently arrested. The government claimed that an "anti-democratic network" in the armed forces involved around 10,000 troops. While the coup failed, it added to the instability that has gripped the country as it transitions away from being a major natural gas supplier and tries to monetize its vast lithium resources. The administration attempted to calm fears as long lines remained at banks and retail fuel stations the day after the coup. The hydrocarbons and energy ministry released a statement on 27 June that everything was normal with fuel supply around the country. It called on the population to refrain from panic buying. State-owned oil and natural gas company YPFB reiterated the message. The company had already been dealing with a strike by truck drivers and road blockades around the country that slowed distribution of gasoline and diesel, as well as 10kg LPG cylinders for household use. Bolivia has seen a sharp decline in natural gas and oil production, with the country now importing close to 80pc of diesel. Crude production was 21,780 b/d in March, down from 50,170 b/d in 2025. Natural gas production is now hovering around 40mn m³/d, down from a peak of 56mn m³/d in 2006, according to YPFB. Gas exported through pipelines to neighboring Argentina and Brazil has been an economic mainstay, but that is changing. Bolivia will stop exports to Argentina in September, and it has a deal to export up to 20mn m³/d to Brazil. Gas exports to Argentina earned Bolivia $223 mn in the first four months of 2023, falling to $164mn this year; it exported $423.5mn to Brazil between this January-April, down from $518mn in 2023. The government wants to replace gas revenues with those from lithium. It has signed direct lithium extraction deals with Chinese and Russian companies, but production is not expected for several years. Bolivia has an estimated 23mn short tons of lithium resources, the largest in the world, according to the US Geological Survey. By Lucien Chauvin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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