Nickel is the primary raw material in the manufacturing of stainless steel, representing more than 60% of consumption, and other heat-resistant alloy materials, representing more than 80%.China alone will require over 1.6 million tons of nickel for its stainless steel production in 2018 at 9% nickel per ton of grade 304 stainless steel.Because of the high price of nickel compared with other chemical elements, nickel has become an important factor affecting the production cost of stainless steel, accounting for about 61% of the cost of the ton of stainless steel.
Increase in nickel prices:
In the second half of 2019, Indonesia’s mining ban caused a big shock to the nickel market. Nickel prices rose from $13,000 a tonne to between $15,000 and $16,000 a tonne between July and August, after rumours began in mid-July that the Indonesian government would ban the export of laterite by 2023. On August 30, the Indonesian government officially announced that the export ban of laterite nickel mine will be implemented in advance from January 1, 2020. Nickel prices on the London Metal Exchange (LME) and Shanghai futures exchange jumped to more than $18,000 a tonne.
Impacts of the ban on export of Nickle:
The ban is different from the 2014 ban on high-grade nickel mines and the 2017 quota ban, but will ban all exports of nickel minerals. From the Indonesian government’s point of view, the ban on the export of nickel ore is mainly aimed at processing and smelting nickel ore in Indonesia, increasing the added value of commodities, so as to bring a multiplier effect for its economic development. But according to industry statistics, Indonesia’s existing nickel-iron processing and RKEF capacity simply cannot fully absorb the nickel produced in the country. Therefore, industry insiders predict that after 2020, the output of Indonesia’s primary nickel ore after 2001, driven by the rapid development of China’s stainless steel industry, the global stainless steel output will increase year by year, from 19.19 million tons in 2001 to 50.73 million tons in 2018, with an increase of 264%.
Looking from the consumption of stainless steel, in 2018, the Chinese stainless steel apparent consumption of 22.095 million tons, year-on-year increase of 1.2146 million tons, the growth of 5.82%, positive consumption performance, drive the industry demand for nickel, stimulate the nickel with steel prices out of the upstream market, also makes the nickel in 2018 years to become one of the most dazzling variety of nonferrous base metal. In this sense, the application pattern of nickel determines the close correlation between nickel price and steel industry.
China’s nickel resources are highly dependent on foreign trade.According to data released by the us geological survey, the world’s proven recoverable reserves of nickel are 89m tonnes.Indonesia has 21m tonnes, Australia 19m, Brazil 11m and Russia 7.6m tonnes, together accounting for almost two-thirds of the world’s reserves.China has 2.5 million tons of nickel reserves, accounting for about 3 percent of the world’s reserves. China is one of the countries with a serious shortage of nickel metal and mineral resources, and its external dependence exceeds 90 percent.Based on the current reserves of nickel in China and the annual exploitation of nickel in China, the domestic reserves of nickel in China are only enough for continuous exploitation for 20 years.Regardless of renewable and imported resources, China will have no primary nickel resources available after 2040.
As the world’s largest producer of stainless steel, China’s strong demand for new energy battery materials in recent years has pushed the global nickel supply market out of the “two-element” route (traditional nickel sulphide and laterite market route). But either route is driven by China, which also determines China’s long-term and high dependence on overseas nickel imports.
Causes of increase in prices:
The future increase in nickel supply will mainly come from laterite nickel. The technological breakthrough in the use of laterite nickel ore in stainless steel production in China, as well as the development in the field of new energy batteries in recent years, have led to the development of laterite nickel ore and traditional nickel sulphide ore – nickel metal and nickel salt integrated production chain. In order to solve the problem of shortage of nickel resources in stainless steel production, since 2006, China has imported a large number of laterite nickel ore to produce nickel pig iron. In 2010, the amount of nickel obtained in the production of nickel pig iron in China surpassed electrolytic nickel for the first time, becoming the main type of nickel products. It is because of the absolute high proportion and the absolute quantity of laterite nickel ore in China’s nickel consumption demand that China has a strong demand for global laterite nickel ore resources. It may be reduced by government export restrictions, which would have a big impact on the global nickel supply.
The repeated changes of Indonesia’s mine ban news have aggravated the volatility of nickel price, which has led to the great fluctuation of China’s stainless steel production cost.Due to China’s support for demand and Indonesia nickel issued in advance of the ban, supply and demand gap persists in nickel metal and the countries of the world’s major resources to control the related resources, such as interference factors existing in the background, the future prices volatility online is a big probability event, strengthen control of the actual market resources and reduce the risk of daily is very important.