nickel

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.

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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.

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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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The Renewables Monthly Metals Index (MMI) rose by 4.4% this month, as the Energy Information Administration released a forecast on renewable energy.

February 2021 Renewables MMI chart

(Editor’s note: This report also includes the MMI for grain-oriented electrical steel, or GOES.)

Renewable energy growth in the US

renewables

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US electricity generation from renewable energy sources is forecast to double over the next 30 years, according to the Energy Information Administration.

Renewable energy sources accounted for 21% of US electricity generation in 2020.  The EIA forecasts that percentage will reach 42% by 2050.

The renewable energy increase will come on the back of declining coal and nuclear power usage, the EIA said. Furthermore, wind power will account for the majority of renewable energy gains until 2024.

After that period, however, solar power will take over the majority of the gains.

“After the production tax credit (PTC) for wind phases out at the end of 2024, solar generation will account for almost 80% of the increase in renewable generation through 2050,” the EIA said. “Based on the Internal Revenue Service safe harbor guidance, EIA assumes that utility-scale solar PV facilities will receive a 30% investment tax credit (ITC) through 2023, which will then be reduced to 10% beginning in 2024.”

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

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import tariff

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This morning in metals news: the U.S. announced it will adjust its tariffs on E.U. products imposed last year; the U.S.’s renewable energy consumption surpassed that of coal for the first time since before 1885; and metals prices have retraced slightly this week.

Find more insight on MetalMiner’s LinkedIn.

U.S. adjusts tariffs on E.U.

Last year, a WTO ruling authorized the U.S. to impose up to $7.5 billion worth in tariffs on E.U. products. The ruling came as a result of the long-running saga over government subsidies for Airbus in Europe.

Yesterday, the United States Trade Representative (USTR) announced the U.S. will adjust the previously announced tariffs, citing the scope of the E.U.’s countermeasures that hit against U.S. subsidies of Boeing.

“In September, 2020 the EU was authorized to impose tariffs affecting $4 billion in U.S. trade as a result of related WTO litigation,” the USTR said in a release. “In implementing its tariffs, however, the EU used trade data from a period in which trade volumes had been drastically reduced due to the horrific effects on the global economy from the COVID-19 virus.  The result of this choice was that Europe imposed tariffs on substantially more products than would have been covered if it had utilized a normal period.  Although the United States explained to the EU the distortive effect of its selected time period, the EU refused to change its approach.”

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steel

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This morning in metals news: the U.S. steel capacity utilization rate reached 71.5% last week; the Energy Information released its monthly energy review; and the nickel price continues to move upward.

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Steel capacity utilization rate hits 71.5%

The U.S. steel capacity utilization rate hit 71.5% for the week ended Nov. 21, the American Iron and Steel Institute (AISI) reported.

U.S. steel output for the week totaled 1.58 million net tons, up 0.1% from the previous week but down 13.2% year over year.

For the year through Nov. 21, U.S. output totaled 70.5 million net tons, down 18.6% year over year.

EIA releases monthly energy review

Aside from steel capacity utilization, the EIA released its Monthly Energy Review today, reporting total energy production of 64.46 quadrillion btu through the first eight months of the year.

Fossil fuel production totaled 50.93 quadrillion btu during the period. Meanwhile, nuclear energy production reached 5.57 quadrillion btu and renewable energy production totaled 7.96 quadrillion btu.

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nickel

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This morning in metals news: the nickel price has gained to start the week; Reliance Steel and Aluminum Co. recently released its Q3 results; and, finally, the U.S. imported $19 billion in energy goods from Mexico last year.

The MetalMiner 2021 Annual Outlook consolidates our 12-month view and provides buying organizations with a complete understanding of the fundamental factors driving prices and a detailed forecast that can be used when sourcing metals for 2021 — including expected average prices, support and resistance levels.

Nickel price gains

The LME three-month nickel price gained over the first two sessions of the week.

Closing Tuesday at $15,384 per metric ton, the LME three-month nickel price gained $236 per metric ton over the previous 24 hours.

On a month-over-month basis, nickel is up 6.8%.

Reliance releases Q3 results

In its Q3 financial results, Reliance Steel and Aluminum posted pretax income of $127 million, up from $102 million in Q2 2020.

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