Higher demand supporting China nickel sulphate prices

Chinese nickel sulphate prices could rise in the coming weeks, bolstered by increasing spot demand from the new energy vehicle (NEV) power battery sector.

Argus yesterday assessed 22pc nickel sulphate prices at 24,000-30,000 yuan/t ($3,428-4,285/t) ex-works, up by 8pc from Yn22,000-28,000/t at the start of this month.

Nickel sulphate is a key feedstock in manufacturing nickel-cobalt-manganese/nickel-cobalt-aluminium (NCM/NCA) power batteries, particularly those with a higher nickel content.

More demand from power battery sector

The Covid-19 outbreak at the start of this year affected the NEV market amid lower buying interest from consumers. The market started to recover in the second quarter, while the pace was slower than expected, as Covid-19 battered the global economy.

Chinese battery producers have continued to launch new capacity, especially high-nickel content producers, which will increase the demand for nickel sulphate.

Battery manufacturer Gotion Hi-Tech is building a 30,000 t/yr production facility for NCM battery cathode material with high nickel content at Hefei city in south China's Anhui province.

The Chinese government has also taken a variety of measures to accelerate the recovery, such as launching a campaign to promote the use of NEVs in rural areas, as part of the country's rural revitalisation strategy.

Following recovery of the market and support from government subsidies, spot demand has increased in July, which is the traditional busy season for the industry.

Battery and components manufacturers plan to replenish feedstock inventories over the next two months, prompting sulphate producers to increase offer prices.

China's newly installed capacity of NCM/NCA batteries was 3GWh in June, up by 12.1pc from May, with June production up by 2.6pc from the previous month, according to China's automotive manufacturers association.

Nickel sulphate prices are also linked closely with nickel metal prices.

Argus yesterday assessed 99.9pc nickel metal prices at Yn104,500-106,000/t, up by 14pc from Yn91,500-93,500/t a month earlier. Prices were supported by stockpiling interest from investors expecting a rise in demand in the coming months as activity in downstream sectors picks up.

New nickel sulphate capacity on the way

Nickel sulphate producers are also expanding capacity in and outside China to meet higher demand from power battery sector in the long term.

Chinese battery material producer Zhejiang Huayou Cobalt has started building a production plant for nickel sulphate at Quzhou city in south China's Zhejiang province. The plant is expected to reach full capacity by 2024.

Chinese market participants are also exploring nickel resources outside China, mainly Indonesia. Huayou raised Yn3bn yuan to finance a high-grade nickel matte mining project in Indonesia to ensure feedstock supplies.

Fellow battery material manufacturer [Green Eco-Manufacture (Gem)](Gem) aims to start production at its Indonesian nickel sulphate plant before the end of 2020.