Nickel prices must rise to meet battery demand: AABC
Higher nickel prices are required to incentivise supply of nickel sulphate for electric vehicle (EV) batteries, particularly given lower cobalt prices, delegates heard today at the Advanced Automotive Battery Conference (AABC) in Strasbourg, France.
Supply of nickel increased by 7pc last year to about 2.19mn t, but demand increased by 8pc to 2.33mn t, increasing the deficit to 147,000t, from 131,000t in 2017, said Denis Sharypin, head of market research at Russian producer Norilsk Nickel.
The battery sector accounted for 124,000t of consumption last year, and while overall nickel demand is expected to increase at a compound annual growth rate (CAGR) of 5pc to 2025, demand from the battery sector is estimated to climb at a CAGR of 18pc over the same period.
But there are concerns about the availability of class 1 nickel, which is required for the production of nickel sulphate used in battery chemicals. Around 70pc of nickel output is used in stainless steel production, which is still growing. And around 60pc of nickel is produced from laterite rather than sulphide ores.
The nickel market will remain in deficit in the coming years, and Indonesia is likely to reinstate a full ban on exports of nickel ore from 2022, further reducing supply, Sharypin said.
"For the nickel industry to supply the demand that's definitely coming, the nickel price needs to be much higher," said Anne Oxley, technical director at project developer Brazilian Nickel. "Major miners are not looking to expand nickel production. The nickel is there in the ground but the question is whether it will come out in time."
There have been large spikes in nickel prices in the past. The market reached $50,000/t in 2007, but has since fallen to $10,000/t, which has reduced investment interest in new projects. Cobalt is typically a by-product of nickel production and the recent fall in cobalt prices to around $20/lb from $44/lb has further reduced the incentive to bring new capacity into operation.
But with the nickel supply deficit expected to increase in the coming years, "it could easily go to $50,000/t again," Oxley said. "[Annual demand for] stainless steel is still growing by at least 4pc. Even without the boom in EVs there's still likely to be a shortage of nickel. It will take a lot of projects at least 10 years to get to production."
Brazilian Nickel expects global nickel supply to reach 3mn t by 2030, with overall demand at 3.8mn t and demand from the EV battery sector accounting for 1.1mn t. Norilsk forecasts that growing EV market share and changing chemistries in lithium-ion batteries could lift nickel demand in passenger EVs to 370,000t by 2025.
Batteries with nickel cobalt manganese (NCM) and nickel cobalt aluminium (NCA) cathodes are expected to account for 67pc of lithium-ion battery production this year, having risen sharply from a 33pc share in 2012, Sharypin said. Cathodes with a higher nickel content offer higher energy density than alternatives such as lithium iron phosphate (LFP), lithium manganese oxide (LMO) and lithium cobalt oxide (LCO)
"Small two-seater cars are very popular in China," said Le Yu, director of research and development at Guangzhou Tinci Materials Technology. "These users care most about range per charge, and that requires higher energy density cathode materials."
Chinese output of LFP fell by 1pc in January-November, Norilsk estimates, while NCM production rose by 51pc in response to changes in government subsidies. The Chinese government has reduced its subsidies for EVs, with shorter driving ranges and has increased payments for longer driving ranges, to encourage consumer uptake.
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China raises EV, ICE vehicles trade-in subsidies
China raises EV, ICE vehicles trade-in subsidies
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Bangladesh scrap activity slowly resumes after curfews
Bangladesh scrap activity slowly resumes after curfews
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US House passes waterways bill
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