nickel

Two years ago, Indonesia instituted a ban on nickel ore exports.

Now, it is contemplating banning exports of tin and copper ore, too.

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Indonesia export bans prompt tin price surge

Indonesia on a globe

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Indonesian President Joko Widodo has been announcing from different forums that his country may stop the export of bauxite next year, copper ore in 2023 and tin in 2024.

On the heels of the announcements, the tin price has surged, MetalMiner Insights data shows. (Subscribers can find additional tin and copper analysis in the next Monthly Metal Outlook report, which will be released Wednesday, Dec. 1.)

The LME three-month tin price closed Monday at $39,450 per metric ton. The price is up 6.6% month over month.

For long, Indonesia has been a major exporter of metal ores, mostly to Asian countries, including China and Japan. The ban on nickel exports had triggered investments, mostly from China, into Indonesian nickel processing.

As part of efforts to improve the country’s external balance & attract investments into the resource processing industry, Indonesia may stop tin exports in 2024, the Indonesian President reiterated last week at the Indonesian central bank’s annual gathering.

The president has made similar statements in recent public appearances about the country’s long-term dependence on raw commodities, reducing its export earnings and employment opportunities.

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The Stainless Monthly Metals Index (MMI) remained flat for this month’s reading.

September 2021 Stainless MMI chart

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Base price and surcharge increase

Both NAS and Outokumpu announced price increases effective Sept. 1.

Outokumpu increased base prices by reducing the discount by one point for all 200 series, 301, 304, 304L, 316L and 430. All other 300 series alloys will see increases by virtue of discount reductions by three points. Outokumpu raised all of its other 400 series alloys by reducing the discount by four points.

In addition to base price increases, Outokumpu increased its width extra for under 48″ to $0.12/lb and added a $0.15/lb gauge extra for 301 18 gauge and lighter. It also increased cut-to-length charges.

NAS increased its base price by reducing the functional discount by one point for 304, 304L and 316L. All other alloys — except for automotive ferritics — will be increased by reducing the discount by two points. Non-430 ferritics will be increased by $0.08/lb, which means these alloys have increased $0.27/lb in 2021.

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This morning in metals news: the U.S. steel capacity utilization rate rose further to 84.6% last week; miner BHP announced a nickel supply agreement with Tesla; and, lastly, crude oil imports have been on the rise over the last four weeks.

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Steel capacity utilization hits 84.6%

steel shipment

Hor/Adobe Stock

Steel capacity utilization in the U.S. steel sector reached 84.6% for the week ending July 24, the American Iron and Steel Institute reported.

The rate increased from 84.1% the previous week and from 60.3% during the same week in 2020.

Steel production during the week ending July 24 totaled 1.87 million net tons, or up 0.5% from the previous week. Furthermore, output increased 38.4% on a year-over-year basis.

BHP announces nickel supply deal with Tesla

Miner BHP announced a new nickel supply deal with electric vehicle maker Tesla.

BHP will supply the EV maker with nickel from its Nickel West asset in Western Australia.

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It is reassuring to see a metal price driven by good old fundamentals.

With so much buzz around supercycles and electrification, the impact of the speculative element in pricing has been much in evidence this year for products like copper and oil.

But according to a recent Reuters post, solid supply and demand fundamentals are driving nickel.

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Supply and demand fundamentals pushing nickel prices

stainless steel background

Oksana Kuzmina/Adobe Stock

A strong rise in the nickel price early this year resulted in the three-month LME quotation hitting a seven-year high of over $20,000 per ton before crashing back to $15,665 during the first half of March. Announcements by Tangshan Stainless in Indonesia that it would switch production of its refined nickel output to an EV cathode battery chemistry undermined the presumption of a looming shortfall in battery quality metal.

The narrative has since moved from nickel being a tight battery grade metal market to simply a tight refined metal market.

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This morning in metals news: Rio Tinto and Schneider Electric have signed a memorandum of understanding to “develop a circular and sustainable market ecosystem for both companies and their customers”; meanwhile, Norilsk Nickel announced it has begun production of carbon-neutral nickel; and, lastly, the city of Savannah, Georgia, is attempting an aluminum cup pilot program.

The MetalMiner Best Practice Library offers a wealth of knowledge and tips to help buyers stay on top of metals markets and buying strategies.

Rio Tinto, Schneider Electric sign MoU

gears featuring words reading sustainability, environment, society and economy

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Rio Tinto has signed a memorandum of understanding (MoU) with Schneider Electric, a collaboration that will see them aim to “develop a circular and sustainable market ecosystem for both companies and their customers.”

“This multi-product partnership will see Schneider Electric use responsibly sourced materials produced by Rio Tinto,” Rio Tinto said in a release. “These include low-carbon aluminium and copper produced with renewable power, iron ore, and borates.”

In addition, Rio Tinto will use energy and industrial services from Schneider Electric.

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Nickel prices and, as a result, stainless surcharges, remain in the doldrums this month, recovering only slightly from last month’s sharp sell-off.

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Nickel prices drop in March

nickel price

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Nickel’s bull story took a hit at the beginning of March by announcements from China’s Tsingshan Group. The firm said it intended to produce battery-grade material from nickel matte, undermining the market’s electric vehicle (EV) narrative.

That is last month’s news. Reuters confirmed the move would effectively close the processing gap between the sort of nickel used by the stainless steel industry and that used for lithium-ion battery production. That undermines the perception that battery-grade nickel is a constrained market facing a looming wall of demand.

Yet, EV demand has always been part of the future, rather than the present.

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construction site

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This morning in metals news: the US Chamber of Commerce’s Commercial Construction Index revealed some optimism among contractors; meanwhile, the Senate confirmed Katherine Tai as the next United States Trade Representative; and, lastly, the nickel price has appeared to stabilize after a sharp drop.

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US Chamber of Commerce’s Commercial Construction Index

The US Chamber of Commerce’s Commercial Construction Index reveals optimism among contractors in the US.

The data reveal contractors are growing more optimistic, “mostly driven by a rise in revenue expectations.”

Furthermore, this quarter, 36% of contractors said they expect their revenues to increase over the next year. That percentage is up from 25% the previous quarter.

“As vaccines continue to roll out, contractors are expecting to hire more workers and anticipating good times ahead. The industry still has a way to go to return to pre-pandemic levels, but rising optimism in the commercial construction industry is a positive sign for the broader economy,” said Neil Bradley, U.S. Chamber of Commerce executive vice president and chief policy officer. “However, finding skilled workers was a critical issue before the pandemic, and while it has remained a chronic problem over the last year, heightened concern may be emerging again as contractors look to hire.”

Senate confirms Tai as USTR

The Senate on Wednesday voted to confirm Katherine Tai as the next top trade official, succeeding the Trump administration’s Robert Lighthizer.

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The Stainless Monthly Metals Index (MMI) rose by 4.3% for this month’s reading, as news of a supply deal by China’s Tsingshan Holding Group helped push the nickel price downward.

March 2021 Stainless MMI chart

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Nickel price falls on Tsingshan supply deal news

The nickel price, like most other base metals, surged through the first two-thirds of February.

The LME nickel price reached as high as $19,722 per metric ton as of Feb. 21.

From there, however, the price dropped, particularly after news of supply deals by China’s Tsingshan Holding Group.

Tsingshan will provide a total of 100,000 metric tons of nickel matte to Huayou Cobalt and CNGR Advanced Material, Reuters reported.

“Nickel’s narrative has largely been predicated on a shortage of battery-grade metal driven by EV demand,” MetalMiner’s Stuart Burns explained earlier this month.

“However, Tsingshan’s supply contract and capacity announcements suggest there will be sufficient supply. As a result, the nickel market reflected a sharp rethink of the deficit view.

“Demand undoubtedly remains robust for nickel. Its medium- to longer-term outlook remains positive on the back of stainless and battery demand.”

A price drop at some point was expected.

“It’s expected that the market would see some price corrections,” MetalMiner CEO Lisa Reisman explained. “Now we are looking closely to see if prices break support levels or hold. Most of the base metals appear to have held onto their support, with the exception of nickel.

“However, the falling nickel price will not result in more availability or shorter lead times. In fact, more fabricators and OEMs have started to pursue import options to help alleviate supply chain hiccups.”

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nickel

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Up to this week, the nickel bull story had been roaring along.

Talk of metal shortages and runaway electric vehicle (EV) and hybrid battery demand have supported that story.

But one announcement has seen that bull run hit a brick wall.

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Nickel bull story slows

News that China’s Tsingshan Holding Group has signed a one-year contract to supply nickel matte to Huayou Cobalt Co and CNGR Advanced Material Co, on March 3 prompted a sharp sell-off.

Under the agreement, Tsingshan will supply 60,000 tonnes of nickel matte to Huayou and 40,000 tonnes a year to CNGR, starting from October 2021. Tsingshan is China’s largest producer of stainless steel.

Just this morning, news sources like MetalBulletin were still promoting the bull narrative, saying nickel premiums continue to rise in China, while ore prices set another record high (even as the European cut cathode premium rises a further 5%).

But almost simultaneously, Reuters reported hot-off-the-press details of the Tsingshan deal and a sharp sell-off ensued. The post noted nickel fell 8.5% to $15,945 per metric ton on the LME for the biggest intraday loss since 2016. Shanghai prices fell by the most in nine months. The SHFE June nickel price ended 6% lower at RMB 130,510 ($20,181) per ton, according to Reuters.

Investment and the supply outlook

The Economic Times posted further details, reporting Tsingshan plans to expand investments in Indonesia. Tsingshan plans for its nickel equivalent output to reach 600,000 metric tons this year. Meanwhile, it has a target of 850,000 tons in 2021 and 1.1 million tons by 2023.

Nickel’s narrative has largely been predicated on a shortage of battery-grade metal driven by EV demand.

However, Tsingshan’s supply contract and capacity announcements suggest there will be sufficient supply. As a result, the nickel market reflected a sharp rethink of the deficit view.

Demand undoubtedly remains robust for nickel. Its medium- to longer-term outlook remains positive on the back of stainless and battery demand.

Indonesia’s efforts are finally paying off. The country is ramping up refined metal output, albeit under Chinese control. As a result, output of battery and refined grades of nickel is increasing. Meanwhile output of lower grade nickel pig iron is declining.

Nevertheless, the world does not seem quite as short of nickel today as it did yesterday.

Do you know the five best practices of sourcing metals including stainless steel?

nickel

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Stainless steel producers have been caught in a pincer movement over the last year of rising nickel prices but falling demand.

It is a counterintuitive situation until you factor in China’s stainless production. Chinese output rose by 4% in the third quarter of last year compared to the rest of the world, which fell by 9%. The disconnect between China and the rest of the world is driving a complex dynamic in the nickel market.

The result is rising LME inventory of refined metal while, at the same time, prices are pushing close to 17-month highs at $18,675 per metric ton, Reuters reported.

Make sure you are following the five best practices of sourcing stainless steel. 

China’s history of nickel imports

Historically, when China’s stainless producers are running hot they suck in refined nickel imports (much as they have done over the last year on aluminium and copper).

But in nickel’s case, the imports are booming for raw materials, nickel pig iron (NPI) and ferro nickel (FeNi), due in large part to Indonesia’s export ban on ores and the resulting investment made in NPI production in Indonesia by Chinese producers.

China’s imports of NPI and FeNi have boomed. Imports totaled 3.4 million tons in 2020, up 80% from 2019. Indonesia made up the lion’s share of those imports. China imported 600,000 tons from the country in 2018 and 2.7 million tons in 2020.

Ores and concentrates, by comparison, have fallen with the Philippines and New Caledonia unable to make up the shortfall. As such, imports have slumped by 30%.

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