Latest market news

Nickel market surplus just 36,000t this year: Macquarie

  • Market: Battery materials, Metals
  • 01/03/24

The nickel market's supply overhang is not as significant as previously assessed, with physical supply-demand fundamentals tighter than market expectations and on track to balance sooner, according to the latest research undertaken by Australian bank Macquarie.

The bank today revised its 2024 surplus to 36,000t, well below the projected figure of 125,000t in February, adding that the market could even move into deficit if year-on-year Indonesian nickel supply growth falls below 13pc. Tighter fundamentals and planned supply curtailments this year mean London Metal Exchange (LME) nickel prices possibly bottomed out at about the $16,000/t reached early this year and now mostly have upside potential, Macquarie said.

The basis for Macquarie's new forecast was the revision of past calculations that had underestimated growth in Chinese consumption. This revision caused it to raise its 2023 estimates for nickel use in Chinese stainless steel production and high nickel alloys by 20pc and 25pc year on year, respectively. Macquarie also said that some estimates of Chinese nickel production had counted units twice, creating the illusion of a vast market oversupply in the past.

Macquarie revised its 2023 market balance data to show a nickel surplus of 170,000t, down from its previous estimate of 240,000t, adjusting for higher physical Chinese demand and the double counting on the supply side. Its 2023 Chinese consumption estimate moved up from from under 2mn t in February to almost 2.1mn t, adding 100,000t to world demand. And Macquarie said that it discovered Chinese imports of nickel pig iron (NPI) and ferro-nickel and also included 40,000-45,000t of contained nickel in low-grade matte (20-25pc), implying lower NPI inventories.

"The perception of a massive overhang of unsold nickel, especially NPI, appears to be wrong and is unsupported by feedback from China of relatively tight NPI markets," Macquarie said.

Macquarie also expects Indonesia to keep 2024 domestic ore production licences (RKABs) at a lower level than 2023, indicating the current tightness in ore availability owing to delays could be prolonged. An overhaul of the country's ore pricing system could further raise nickel production costs and the floor for prices beyond Macquarie's previous assessment of $15,000-16,000/t.

After no growth in the battery market last year on persistent destocking, demand for nickel in batteries is also on track to rise sharply in 2024, Macquarie said.

"[...] the Chinese market consensus of 10pc year-on-year growth in nickel use in pCam (ternary precursors) is likely to be a significant underestimate," it said. "We think if restocking takes place, the actual number could be closer to 20pc."

Macquarie further said its previous estimates for nickel use in high-nickel alloys missed 20,000t of end-use. The nickel consumption market grew by 25pc year on year in 2023 to 130,000-140,000t and is poised for double-digit growth in 2024, Macquarie said.

Macquarie noted 254,000t worth of supply cuts in the nickel market, including 194,000t worth of ferro-nickel and NPI, 30,000t of nickel metal and 20,000t of concentrate. Macquarie expects the curtailments to now already be priced in.

The bank said it was still possible for nickel supply growth to accelerate again if the current price rebound persists, which would then once again grow the surplus, but it currently anticipates that the market has hit the low point for the present cycle.


Sharelinkedin-sharetwitter-sharefacebook-shareemail-share

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

News
15/07/24

Vietnam’s Vinfast cuts EV sales goal, delays US plant

Vietnam’s Vinfast cuts EV sales goal, delays US plant

Singapore, 15 July (Argus) — Vietnam-based electric vehicle (EV) manufacturer Vinfast Auto has lowered its 2024 EV delivery goal and delayed its North Carolina EV plant's first production by three years, because of economic headwinds. "We have adopted a more prudent outlook that is carefully calibrated to near-term headwinds, taking into full consideration the realities of market volatility and potential challenges," said the chairwoman of Vinfast's board of directors Le Thi Thu Thuy on 12 June. Vinfast now expects to deliver 80,000 EVs in 2024, down from the 100,000 units it set earlier this year and having missed its delivery goal of 40,000-50,000 last year. Vinfast delivered 21,747 EVs in January-June, almost doubling on the year, according to the company. Its EV sales over April-June stood at 12,058 units, up by 24pc on the quarter and 26pc on the year. It started building a $2bn EV factory in US North Carolina's Chatham county last year, with output scheduled to begin in 2025 . But the firm has now made the "strategic decision" to push it back to 2028, Vinfast said. VinFast earlier this year said that it would invest $2bn in south India's Tamil Nadu state to develop its EV sector, including building an EV plant that can produce 150,000 units/yr. The plant will be "opened" in the first half of 2025, said Vingroup's chairman Pham Nhat Vuong last month, adding that India will be Vinfast's biggest Asia market. The global battery and EV sectors have been facing various economic and geopolitical headwinds. This includes persistently elevated interest rates that are curbing consumer spending, and rising geopolitical market barriers starting with the US and EU's tariffs on Chinese EVs, as well as Canada looking into potential punitive duties on Chinese EVs. By Joseph Ho Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Find out more
News

Germany's Aurubis copper smelter back from maintenance


12/07/24
News
12/07/24

Germany's Aurubis copper smelter back from maintenance

London, 12 July (Argus) — Germany's Aurubis today announced that its Hamburg copper smelter returned to service on 11 July from the largest maintenance shutdown in the company's history that began 7 May. A restart is now under way following the €95mn 60-day maintenance that included an overhaul of the flash smelter, installation of heat exchangers in the contact acid plant, as well as the installation of a tap hold drill and tamping machine for improved safety of copper slag tapping. Hydrogen-ready anode furnaces were also installed as measures to improve sustainability. Investments in automation are set to improve efficiency and extend the frequency of planned maintenance rounds to three years from two. The Hamburg smelter's outage has exacerbated sulphuric acid tightness in Europe , and the operational restart is expected to provide some relief to the market. This comes in addition to the lack of availability of molten sulphur in the region, leading to shortages of sulphur burnt acid , which has prompted some consumers to replace burnt acid with smelter acid, lifting demand. Aurubis produced 1.19mn t of sulphuric acid during the first six months of the 2023-24 financial year (October-March), up by 1pc on the same period a year earlier. Output at Aurubis' Hamburg smelter rose by 11pc to 512,000t in the period, while output from the Pirdop smelter saw a 6pc decline on the period to 679,000t . For the first three months of the year, Aurubis produced 598,000t of acid, unchanged from the same quarter of 2022-23, as increased output at its Hamburg smelter offset a decline from Bulgaria's Pirdop plant. Production at Hamburg totalled 258,000t from January-March. By Maria Mosquera Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Australia’s BHP to import sulphuric acid for Lynas


12/07/24
News
12/07/24

Australia’s BHP to import sulphuric acid for Lynas

Singapore, 12 July (Argus) — Australian resources firm BHP has "affirmed its commitment to using reasonable efforts" to supply imported acid to Australia-listed mining company Lynas Rare Earths, Lynas said today. This comes after BHP announced a temporary suspension of its Western Australia nickel business from October, citing bearish expectations against nickel prices. Lynas has a supply contract with BHP Nickel West for the provision of sulphuric acid from the Kalgoorlie nickel smelter or imported sources to its Kalgoorlie rare earths processing facility, with the initial term until 30 June 2027. By Deon Ngee Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

US, Mexico exempt Brazilian steel from new 232 tariffs


11/07/24
News
11/07/24

US, Mexico exempt Brazilian steel from new 232 tariffs

Sao Paulo, 11 July (Argus) — The US and Mexico will exempt Brazilian steel imported from Mexico from adjustments made to the US' section 232 tariffs. Steel imported from Brazil that is processed in Mexico then exported into the US will not be subject to tariffs, the Mexican external relations ministry said today, adding that "the melting and pouring requirements will not apply to products that come from [Brazil]." The US and Mexico jointly announced on Wednesday new import restrictions that will reinstate the 25pc and 10pc section 232 tariffs on some steel and aluminum imported from Mexico, requiring imported steel to be melted and poured in the US-Mexico-Canada free trade agreement (USMCA) region, while aluminum should not contain primary aluminum or be smelt or cast in Belarus, China, Iran or Russia. The new measures aimed at preventing Chinese steel from triangulating through Mexico, which both the administration and a bipartisan group of lawmakers have accused Mexico of allowing . The move is part of an effort from Mexico's government to avoid negative effects on the country's steelmaking sector, which is suffering because of a 50-day long strike at one of its key mills, ArcelorMittal's Lazaro Cardenas mill in the Michoacan state, that has cost the firm almost 500,000 metric tonnes (t) in lost production. Brazil is an important steel exporter to Mexico. In June, the South American country exported around 68,480t of slab to Mexico, more the double the amount from the same month in 2023, according to Brazil's ministry of development, industry and foreign trade data compiled by the Global Trade Tracker. Steelmakers that have greater exposure to selling products with less added value to units in Mexico to then be rolled there are the companies that tend to benefit the most from this situation, Genial Investimentos metals analyst Igor Guedes told Argus . By Carolina Pulice Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

EU makes 10,175t of Egypt HRC available in quota


11/07/24
News
11/07/24

EU makes 10,175t of Egypt HRC available in quota

London, 11 July (Argus) — The European Commission has made 10,175t of Egyptian hot-rolled coil (HRC) available to importers in the bloc, after controls by a member state showed some volumes put forward for customs clearance were "erroneous". The quota was originally exhausted on 1 July, and customs figures showed that 185,208t of Egyptian HRC was filed for clearance by 8 July, all of which should have been subject to a prorated safeguard duty of 5.85pc. The quota for the country was 141,849t, which means that 53,534t was unable to clear customs, in which case no duty would be payable on Egyptian material. The commission said that the next allocation will take place on 12 August, "in order to give enough time to member states to send drawing requests that didn't benefit the quota". Market participants were perplexed by the development, and expect further clarity in the coming days. All other HRC ‘other countries' quotas remain exhausted. About 348,809t was available in the general ‘other countries' quota to the benefit of Australia, Switzerland, the US, Libya and Canada — the latter three have so far imported a total of 0t. Market participants largely expect that the member state cancelling some clearances will be Italy, which offers importers the chance to change their mind on clearance if duties are payable. Buyers in other member states have questioned whether it is fair for Italy to allow this option, when the majority of other states do not. The Belgian customs authority has actually complained to the commission about Italy's clawback option, questioning its legality, but has not received any response. The commission says any member state can adopt the clawback mechanism, but not all have decided to. By Lora Stoyanova and Colin Richardson Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Generic Hero Banner

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more