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Sudbury strike, Indonesia lockdown jolt nickel prices

  • Spanish Market: Metals
  • 09/07/21

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.

LME 3M nickel prices choppy but treading higher $/t

Nickel sulphate cif China hits $4,000/t $/t

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20/11/24

ArcelorMittal could close two service centres in France

ArcelorMittal could close two service centres in France

London, 20 November (Argus) — Europe's largest steelmaker ArcelorMittal is contemplating closing two service centres in France as part of a restructuring at its Centres de Services business in the country. The company informed staff on Tuesday that it might close its Reims and Denain sites because of a "sharp drop in activity among its industry and automotive customers", the company told Argus . Negotiations with trade unions will begin shortly, it said. Rumours about the potential closures have been circling since just before a large industry event in Hannover, Germany, in late October. Further consolidation and restructuring is expected throughout the European service centre market because of the fall in real consumption, and the difficult financial position it has caused for some processors. Most service centres have been selling processed sheet at a loss in recent months, because of weak end-consumption. German cold-roller Bilstein, that sells predominantly to the automotive industry, will reduce headcount and is contemplating closing one of its five lines, or reducing shifts across its business. There have also been market discussions about ArcelorMittal selling other automotive-facing service centres in Europe, as part of a wider reorganisation of the EU processing sector. Germany's largest steelmaker, ThyssenKrupp, has closed some of its distribution sites in its home country. Participants note the service centres are not part of ThyssenKrupp Steel Europe, which is still in talks with Daniel Kretinsky over taking a 50pc share in the business. ThyssenKrupp's ownership change could have wider ramifications for the service centre and steelmaking sector in general, with Kretinsky open to finding a strategic partner. By Colin Richardson Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Graphjet launches Malaysian biomass-to-graphite plant


20/11/24
20/11/24

Graphjet launches Malaysian biomass-to-graphite plant

Singapore, 20 November (Argus) — Nasdaq-listed Graphjet Technology has started operations at its artificial graphite plant in Malaysia, which will produce battery-grade graphite using recycled palm kernel shells (PKS), the firm said on 19 November. Graphjet's facility has the capacity to produce 3,000 t/yr of graphite by recycling up to 9,000 t/yr of PKS, which is sufficient to produce batteries for 40,000 electric vehicles (EVs)/yr. The firm has already received its first shipment of PKS, it said. Graphjet has another artificial graphite production facility planned in US' Nevada, and it plans to produce hard carbon at the Malaysian facility to use as feedstock at the Nevada facility. The Nevada facility is expected to have the capacity to recycle 30,000 t/yr of PKS to produce 10,000 t/yr of battery-grade artificial graphite and is slated to begin production in 2026, said Graphjet in April. China, the dominant producer of graphite, added a number of graphite products into its export licensing scheme at the end of last year. The move back then alarmed its neighbours, Japan and South Korea , which are major battery-producing countries and they have since been looking to reduce their dependency on Chinese graphite. China's graphite flake exports fell by 23pc to 44,103t during January-September following the exports curb, according to Chinese customs data. By Joseph Ho Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Japan, Peru sign deal to enhance copper supply chain


19/11/24
19/11/24

Japan, Peru sign deal to enhance copper supply chain

Tokyo, 19 November (Argus) — The Japanese and Peruvian governments have signed a strategic partnership to bolster the copper supply chain, with a comprehensive road map to promote bilateral business opportunities for natural resources. This agreement came as Japan accelerates efforts to secure copper supplies, while Peru is a key global copper supplier. The two countries rolled out a comprehensive road map for enhancing political and economic relationships on 17 November. This includes organising an annual bilateral meeting for mining and energy investment as well as conducting joint research on efficient mining operations, such as removal of impurities from copper ores, according to the road map. Unlike conventional initial agreements that are typically signed without a specific closing date, the Japanese-Peruvian road map has set a 10-year timeline that will end by 2033. This seems to reflect Japan's sense of urgency in securing base metal supply including copper. "Japan would like to continue to co-operate with Peru to strengthen the resilience of the supply chain of mineral resources such as copper", said Japanese prime minister Shigeru Ishiba in Peru on 17 November. Japan's current strategic energy plan that was revised in 2021 aims to lift base metal self-sufficiency to 80pc by 2030, up by around 30 percentage points from the 2018 level. But the strategy appears to not be on track, the country's ministry of trade and industry Meti reiterated in late October without disclosing the current rate. Japan appears to be especially concerned about copper supply. Meti forecasts global copper demand to double to around 50mn t in 2035 following the global electrification of applications including electric vehicles, while there will likely be a 10mn t/yr supply shortage. The country's domestic copper ingot demand is forecast to exceed 1.4mn t by 2030, according to Meti, up by 400,000 t from the 2022 level. This is partially attributed to the adoption of more artificial intelligence, it added. Japan is making efforts to diversify copper supply sources, given the deterioration in quality of copper supplied by the world's biggest producer Chile, Meti said. Peru and Argentina are prominent suppliers in the region, according to Meti, adding that Japanese government support is essential for acquiring stakes in upstream operations in those countries, given their higher risks. By Yusuke Maekawa Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Cop: Argentina pulls delegation from Baku


13/11/24
13/11/24

Cop: Argentina pulls delegation from Baku

Montevideo, 13 November (Argus) — Argentina's government today withdrew its delegation from the UN Cop 29 climate summit in Baku, Azerbaijan. The country's foreign affairs ministry confirmed to Argus that the delegation had been told to leave the event, which began on 11 November and will run through 22 November. No reason was given for the decision, but it fits the general policies of President Javier Milei, who has expressed skepticism about climate change. Milei eliminated the country's environment ministry shortly after taking office in December 2023. He is also pursuing investment to monetize oil and gas reserves, with a focus on the Vaca Muerta unconventional formation. Vaca Muerta has an estimated 308 trillion cf of natural gas and 16bn bl of oil, according to the US Energy Information Administration. In October, the government created the Argentina LNG division with a plan to involve private companies and the state-owned YPF to produce and export up to 30mn metric tonnes (t)/yr of LNG by 2030. It wants to export 1mn bl of crude. The plans are closely linked to a new investment framework, known as RIGI, that will provide incentives for large-scale investments. The administration is also pushing hard for investment in critical minerals, including copper and lithium. Argentina has the world's second-largest lithium resources, estimated at 22mn t by the US Geological Survey. It has copper potential that the RIGI would help tap. The government has not specified if pulling out of Cop 29 means Argentina will withdraw from the Paris Agreement, which Argentina ratified in 2016. The country's nationally determined contribution calls for net emissions not to exceed 359mn t of CO2 by 2030. This represents a 21pc reduction of emissions from the maximum reached in 2007. By Lucien Chauvin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Cop: Guterres warns of exploitation in minerals race


13/11/24
13/11/24

Cop: Guterres warns of exploitation in minerals race

London, 13 November (Argus) — Demand for critical minerals vital to the electric vehicle and renewable energy sectors should be met without causing a "stampede of greed" that exploits local communities and harms those living in poverty, UN secretary-general Antonio Guterres has said. "We are here to respond to a key challenge — turning the energy transition towards justice," Guterres told the UN Cop 29 climate summit in Baku, Azerbaijan. Guterres warned that as the energy transition accelerates, it could present more risks than opportunities for many developing countries rich in metals such as copper or lithium unless managed with justice and equity. "For developing countries rich in resources, [the energy transition] is a huge opportunity to generate prosperity, eliminate poverty and drive sustainable development. But too often this is not the case," he said. "Too often we see the mistakes of the past repeated in a stampede of greed that crushes the poor," Guterres added. "We see developing countries ground down to the bottom of value chains, as others grow wealthy on their resources." In response to concerns in developing countries rich in battery minerals, the UN in April established the Panel on Critical Energy Transition Minerals. The panel of governments, international organisations, industry and civil society developed "voluntary principles" for managing value chains for critical energy transition minerals. The panel's report outlines seven voluntary guiding principles covering environmental and human rights, responsible investment and finance, transparency and anti-corruption measures, and international co-operation. It also identifies five "actionable recommendations", including establishing an advisory group to accelerate benefit-sharing and economic diversification, developing a mineral traceability framework and creating a fund to address mine closures and other mining legacies. The UN code has no enforcement mechanisms, and so implementation depends on the participation of industry, governments and civil society. By Cristina Belda Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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