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Nickel is expected to gradually shift from structural surplus to comprehensive surplus
2023/7/27
The main contradiction of Shanghai Nickel revolves around the contradiction between low spot inventory of refined nickel and medium and long-term surplus expectations. The author believes that in the second half of the year, the nickel element is expected to gradually shift from a structural surplus of nickel elements to a comprehensive surplus, the problem of low inventory of refined nickel will gradually be improved, and the price center of refined nickel may move down. There are mainly three reasons:
1. The production capacity of electrolytic nickel is gradually put into production, and there is an oversupply in the medium and long term
From January to June 2023, the output of refined nickel will be 107,940 tons, an increase of about 34.5% compared with that in 2022. It can be seen from the substantial increase in the production of refined nickel that the production capacity of refined nickel is climbing rapidly, which is mainly due to the commissioning of nickel sulfate to produce electrolytic nickel. The nickel sulfate production line is mainly driven by profit. In theory, when the price of refined nickel exceeds the cost of nickel sulfate plus the production cost, the electrolytic nickel has production profits. The production cost of electrolytic nickel prepared from nickel sulfate is mainly composed of electricity, equipment and labor costs. According to SMM's research, the electricity cost is about 5,000 yuan/ton, and with the addition of factors such as labor and waste rate, it is estimated that the complete cost may be 7,500-8,000 yuan/ton.
In the second half of the year, the production capacity of electrolytic nickel continued to be released in large quantities. Domestically, the Huayou Cobalt Guangxi project has about 60,000 tons of refined nickel production capacity put into operation, and Qingshan GEM Phase II’s 18,000 tons of refined nickel production capacity is expected to be put into production in the fourth quarter. Zhongwei, Yuanli, Qisheng, and Maolian’s production capacity will further increase slope. Overseas, Tsingshan's new refined nickel production capacity project in Indonesia is expected to be put into operation in August-September. On the whole, in 2023, the world is expected to add 280,000 tons of refined nickel production capacity, including about 197,000 tons of new domestic production capacity and 83,000 tons of new overseas production capacity.
In terms of delivery products, the Shanghai Futures Exchange has approved the "HUAYOU" brand electrolytic nickel (Ni99.96, electrowinning process) produced by Quzhou Huayou Cobalt New Material Co., Ltd., a wholly-owned subsidiary of Zhejiang Huayou Cobalt Co., Ltd., to be used in nickel futures The performance and delivery of the contract, the registered production capacity is 6,000 tons. In addition, enterprises such as Tsingshan and Guangde Environmental Protection also have the willingness to apply for delivery products. Overseas, on July 20, "HUAYOU" brand electrolytic nickel successfully registered as a delivery brand on the London Metal Exchange, becoming the first company to benefit from the launch of the LME nickel brand registration fast track.
2. The margin of imported pure nickel has improved, and the expected increase is obvious
The import volume of refined nickel from January to June 2023 is 47,600 tons, a decrease of about 43% year-on-year from January to June 2022, of which the import volume in June is 13,700 tons, an increase of about 31.44% month-on-month and a year-on-year increase of 53%. Imports of pure nickel improved significantly. Due to the high nickel price at the end of 22, the Russian Nickel Long-Term Agreement was not successfully signed, and the import window continued to be closed for a long time from January to April, so the import volume was extremely low. With the signing of the Russian Nickel Long-term Agreement in late April, 5 -The amount of pure nickel imported in June improved rapidly month-on-month, and most of the long-term orders signed during the year were priced by SHFE contracts alone or mixed by SHFE and LME contracts, which avoided the disturbance of import profit and loss to a certain extent. Therefore, although the import volume of refined nickel in the first half of 2023 has dropped significantly compared with previous years, the Russian Nickel Long-term Association orders in the second half of the year can still maintain a relatively high import volume of refined nickel.
3. Growth of downstream demand for refined nickel is weak
Before 2007, the demand growth of refined nickel mainly came from the demand of stainless steel. After the industrial invention of using ferronickel instead of refined nickel to produce stainless steel in 2007, the application of laterite nickel ore rose. Laterite nickel ore gradually occupies a dominant position in the market, and ferronickel replaces refined nickel as the main raw material for stainless steel. With the continuous release of nickel-iron production capacity in Indonesia, the proportion of stainless steel nickel elements derived from refined nickel is gradually decreasing. According to SMM statistics, the nickel raw materials for 300 series stainless steel have dropped from 12.61% in 2019 to 1.92% this year, and the impact of the growth of stainless steel on refined nickel is gradually decreasing.
In recent years, with the rapid rise of the new energy automobile industry, the market demand for nickel sulfate has rapidly increased, and new energy batteries have gradually become the second largest demand field for nickel besides stainless steel. There are four main production process paths for the production of nickel sulfate. Among them, two nickel elements are provided by nickel sulfide ore, respectively, nickel sulfide ore is made into high nickel matte by pyrometallurgy process and further refined to obtain nickel sulfate, or nickel sulfide ore is pyrometallurgically smelted. On the basis of high-grade matte nickel, it is processed into electrolytic nickel and then nickel sulfate. The other two supply nickel elements from laterite nickel ore, which are nickel hydroxide and cobalt produced by laterite nickel ore through hydrometallurgy process and then made into nickel sulfate, or laterite nickel ore through pyrometallurgy process to obtain nickel matte, and converter blowing to obtain high matte nickel Then make nickel sulfate. According to SMM's calculations, the proportion of nickel sulfate and nickel elements derived from refined nickel has dropped from a maximum of about 53% in 2021 to the present almost no need for refined nickel to produce nickel sulfate, and the production cost of nickel sulfate has been greatly reduced. This is mainly due to the rapid release of Indonesia's high production capacity of matte nickel and nickel hydroxide (MHP) in recent years. From January to June 2023, Indonesia's MHP production will be 74,700 metal tons, an increase of about 78% year-on-year from January to June 2022, and Indonesia's high nickel matte output will be 123,900 metal tons, an increase of about 89% year-on-year from January to June 2022. The cost of producing nickel sulfate through high nickel matte or nickel hydroxide is much lower than that of nickel soy, so the demand for nickel sulfate for refined nickel is declining rapidly.
In addition, the power batteries used in new energy vehicles mainly include lithium iron phosphate and ternary batteries. The ternary battery is nickel cobalt lithium manganese oxide, which has a large demand for nickel sulfate. Compared with ternary batteries, lithium iron phosphate is mainly composed of abundant and cheap phosphorus and iron elements. The cost is relatively low, and it has the characteristics of high safety, environmental protection, and long life. Its energy density is far behind that of ternary batteries. With the advancement of science and technology, it is gradually shrinking, so lithium iron phosphate batteries are gradually replacing ternary batteries and are more favored by new energy vehicle manufacturers. According to Mysteel statistics, the installed capacity of ternary batteries will be 74.3GWh in 2021, accounting for about 48% of the total installed capacity of power batteries, while the installed capacity of ternary batteries will be 47.9GWh from January to June 2023, accounting for about 31% of the total installed capacity of power batteries . Lithium iron phosphate batteries are gradually occupying the market share of power batteries, and the market share of ternary batteries is showing a downward trend. The demand for nickel in new energy power batteries has not increased marginally with the rise of new energy vehicles.
Therefore, it can be seen from the demand for refined nickel that the demand for refined nickel for stainless steel is gradually declining, and the demand for nickel in new energy power batteries has not increased marginally with the rise of new energy vehicles. The demand for refined nickel for nickel sulfate needed for batteries is gradually disappearing with the continuous release of Indonesian nickel intermediate product production capacity. At present, the field of alloy and electroplating is gradually becoming the main contributor to the marginal change in the demand for refined nickel. It is expected that the related industries can still maintain a growth rate of 10%-15%, but due to the small base, the alloy and electroplating industry will be about 20% in 2022. With a nickel consumption of 150,000 metal tons, its demand increase is difficult to match the supply increase of refined nickel.
1. The production capacity of electrolytic nickel is gradually put into production, and there is an oversupply in the medium and long term
From January to June 2023, the output of refined nickel will be 107,940 tons, an increase of about 34.5% compared with that in 2022. It can be seen from the substantial increase in the production of refined nickel that the production capacity of refined nickel is climbing rapidly, which is mainly due to the commissioning of nickel sulfate to produce electrolytic nickel. The nickel sulfate production line is mainly driven by profit. In theory, when the price of refined nickel exceeds the cost of nickel sulfate plus the production cost, the electrolytic nickel has production profits. The production cost of electrolytic nickel prepared from nickel sulfate is mainly composed of electricity, equipment and labor costs. According to SMM's research, the electricity cost is about 5,000 yuan/ton, and with the addition of factors such as labor and waste rate, it is estimated that the complete cost may be 7,500-8,000 yuan/ton.
In the second half of the year, the production capacity of electrolytic nickel continued to be released in large quantities. Domestically, the Huayou Cobalt Guangxi project has about 60,000 tons of refined nickel production capacity put into operation, and Qingshan GEM Phase II’s 18,000 tons of refined nickel production capacity is expected to be put into production in the fourth quarter. Zhongwei, Yuanli, Qisheng, and Maolian’s production capacity will further increase slope. Overseas, Tsingshan's new refined nickel production capacity project in Indonesia is expected to be put into operation in August-September. On the whole, in 2023, the world is expected to add 280,000 tons of refined nickel production capacity, including about 197,000 tons of new domestic production capacity and 83,000 tons of new overseas production capacity.
In terms of delivery products, the Shanghai Futures Exchange has approved the "HUAYOU" brand electrolytic nickel (Ni99.96, electrowinning process) produced by Quzhou Huayou Cobalt New Material Co., Ltd., a wholly-owned subsidiary of Zhejiang Huayou Cobalt Co., Ltd., to be used in nickel futures The performance and delivery of the contract, the registered production capacity is 6,000 tons. In addition, enterprises such as Tsingshan and Guangde Environmental Protection also have the willingness to apply for delivery products. Overseas, on July 20, "HUAYOU" brand electrolytic nickel successfully registered as a delivery brand on the London Metal Exchange, becoming the first company to benefit from the launch of the LME nickel brand registration fast track.
2. The margin of imported pure nickel has improved, and the expected increase is obvious
The import volume of refined nickel from January to June 2023 is 47,600 tons, a decrease of about 43% year-on-year from January to June 2022, of which the import volume in June is 13,700 tons, an increase of about 31.44% month-on-month and a year-on-year increase of 53%. Imports of pure nickel improved significantly. Due to the high nickel price at the end of 22, the Russian Nickel Long-Term Agreement was not successfully signed, and the import window continued to be closed for a long time from January to April, so the import volume was extremely low. With the signing of the Russian Nickel Long-term Agreement in late April, 5 -The amount of pure nickel imported in June improved rapidly month-on-month, and most of the long-term orders signed during the year were priced by SHFE contracts alone or mixed by SHFE and LME contracts, which avoided the disturbance of import profit and loss to a certain extent. Therefore, although the import volume of refined nickel in the first half of 2023 has dropped significantly compared with previous years, the Russian Nickel Long-term Association orders in the second half of the year can still maintain a relatively high import volume of refined nickel.
3. Growth of downstream demand for refined nickel is weak
Before 2007, the demand growth of refined nickel mainly came from the demand of stainless steel. After the industrial invention of using ferronickel instead of refined nickel to produce stainless steel in 2007, the application of laterite nickel ore rose. Laterite nickel ore gradually occupies a dominant position in the market, and ferronickel replaces refined nickel as the main raw material for stainless steel. With the continuous release of nickel-iron production capacity in Indonesia, the proportion of stainless steel nickel elements derived from refined nickel is gradually decreasing. According to SMM statistics, the nickel raw materials for 300 series stainless steel have dropped from 12.61% in 2019 to 1.92% this year, and the impact of the growth of stainless steel on refined nickel is gradually decreasing.
In recent years, with the rapid rise of the new energy automobile industry, the market demand for nickel sulfate has rapidly increased, and new energy batteries have gradually become the second largest demand field for nickel besides stainless steel. There are four main production process paths for the production of nickel sulfate. Among them, two nickel elements are provided by nickel sulfide ore, respectively, nickel sulfide ore is made into high nickel matte by pyrometallurgy process and further refined to obtain nickel sulfate, or nickel sulfide ore is pyrometallurgically smelted. On the basis of high-grade matte nickel, it is processed into electrolytic nickel and then nickel sulfate. The other two supply nickel elements from laterite nickel ore, which are nickel hydroxide and cobalt produced by laterite nickel ore through hydrometallurgy process and then made into nickel sulfate, or laterite nickel ore through pyrometallurgy process to obtain nickel matte, and converter blowing to obtain high matte nickel Then make nickel sulfate. According to SMM's calculations, the proportion of nickel sulfate and nickel elements derived from refined nickel has dropped from a maximum of about 53% in 2021 to the present almost no need for refined nickel to produce nickel sulfate, and the production cost of nickel sulfate has been greatly reduced. This is mainly due to the rapid release of Indonesia's high production capacity of matte nickel and nickel hydroxide (MHP) in recent years. From January to June 2023, Indonesia's MHP production will be 74,700 metal tons, an increase of about 78% year-on-year from January to June 2022, and Indonesia's high nickel matte output will be 123,900 metal tons, an increase of about 89% year-on-year from January to June 2022. The cost of producing nickel sulfate through high nickel matte or nickel hydroxide is much lower than that of nickel soy, so the demand for nickel sulfate for refined nickel is declining rapidly.
In addition, the power batteries used in new energy vehicles mainly include lithium iron phosphate and ternary batteries. The ternary battery is nickel cobalt lithium manganese oxide, which has a large demand for nickel sulfate. Compared with ternary batteries, lithium iron phosphate is mainly composed of abundant and cheap phosphorus and iron elements. The cost is relatively low, and it has the characteristics of high safety, environmental protection, and long life. Its energy density is far behind that of ternary batteries. With the advancement of science and technology, it is gradually shrinking, so lithium iron phosphate batteries are gradually replacing ternary batteries and are more favored by new energy vehicle manufacturers. According to Mysteel statistics, the installed capacity of ternary batteries will be 74.3GWh in 2021, accounting for about 48% of the total installed capacity of power batteries, while the installed capacity of ternary batteries will be 47.9GWh from January to June 2023, accounting for about 31% of the total installed capacity of power batteries . Lithium iron phosphate batteries are gradually occupying the market share of power batteries, and the market share of ternary batteries is showing a downward trend. The demand for nickel in new energy power batteries has not increased marginally with the rise of new energy vehicles.
Therefore, it can be seen from the demand for refined nickel that the demand for refined nickel for stainless steel is gradually declining, and the demand for nickel in new energy power batteries has not increased marginally with the rise of new energy vehicles. The demand for refined nickel for nickel sulfate needed for batteries is gradually disappearing with the continuous release of Indonesian nickel intermediate product production capacity. At present, the field of alloy and electroplating is gradually becoming the main contributor to the marginal change in the demand for refined nickel. It is expected that the related industries can still maintain a growth rate of 10%-15%, but due to the small base, the alloy and electroplating industry will be about 20% in 2022. With a nickel consumption of 150,000 metal tons, its demand increase is difficult to match the supply increase of refined nickel.
From the above three points, it can be seen that with the rapid release of electrolytic nickel production capacity in China and Indonesia, Russian nickel is priced separately by SHFE contract or mixed by SHFE and LME contracts, and its import volume is reduced by the disturbance of the import window. Certain guarantees have been obtained, and the demand for refined nickel for stainless steel is gradually decreasing, and the demand for nickel elements in new energy power batteries is gradually decreasing. The continuous release of nickel is gradually disappearing, nickel is expected to gradually shift from structural surplus to overall surplus, the problem of low inventory of refined nickel will be gradually resolved, and the price center of refined nickel may move down in the second half of the year.
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