Low demand thwarts nickel sulphate price growth

Chinese nickel sulphate prices are widely expected to hold flat in the coming weeks given subdued demand from the new-energy vehicle (NEV) power battery sector, according to market participants.

Demand from the power battery sector is recovering more slowly than expected as Covid-19 batters the global economy. Nickel sulphate is a main feedstock in manufacturing nickel-cobalt-manganese/nickel-cobalt-aluminium (NCM/NCA) power batteries, particularly those with a higher nickel content.

China's newly installed capacity for NCM/NCA power batteries used in NEVs was 2.7GWh in May, up by 2pc from April but down by 27.7pc from a year earlier, according to China's automotive manufacturers association.

Chinese battery producers have also reduced nickel sulphate imports in an effort to lower feedstock inventories. The country imported 164t of nickel sulphate in May, down by 82pc from 934t a year earlier, and by 56pc from 368t in April, according to data from China's general administration of customs.

Domestic battery producers are mostly operating from long-term contracts and are expecting demand to rise in the third quarter, the traditional busy season for the industry, market participants said.

Long-term demand for nickel sulphate is expected to be supported by new production projects. Private-sector Chinese petrochemical producer Wanhua Chemical plans to build a facility for NCM/NCA power battery materials with capacity of 10,000 t/yr.

The Chinese government has taken a variety of measures to boost the NEV sector, such as revising its NEV credit score programme for 2021-23 to establish a long-term mechanism to develop the industry.

Argus assessed nickel sulphate prices at 23,000-29,000 yuan/t ($3,254-4,103/t) ex-works on 30 June, stable since 16 June.