Rick
16/08/2022
According to forecasts provided by Trading Economics, the nickel price could come under some short term pressure due to a mild surplus. The longer term forecast is for the nickel price to trend up toward $29,000 per tonne in 12 months time. See the latest outlook from Trading Economics quoted below:
Current Demand
Nickel futures were trading around the $21,500-per-tonne mark, not far from July lows, as rising production and fears of a demand-sapping global recession continued to pressure the market. Global primary nickel production could increase 19% in 2022 to 3.21 million mt, and the nickel deficit of 2021 should turn into a mild surplus of around 40,000 mt in 2022, according to Russia's Nornickel. Adding to the bearish outlook were lingering worries that a global economic slowdown triggered by an aggressive tightening from major central banks would dampen metal's demand.
Future Demand
Nickel is expected to trade at 24286.20 USD/MT by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate it to trade at 28729.63 in 12 months time.
Rick
The US government’s scientific agency has added Nickel and Zinc to the 2021 list of ‘Critical Minerals’ and removed helium, potash, rhenium and strontium, according to Matthew Cranston’s article in the AFR titled Australia well positioned to supply critical minerals to US.
And yesterday, US Commerce Secretary Gina Raimondo committed to help finance Australian critical minerals projects through America’s export financing arms, as President Joe Biden invokes Cold War powers to boost the domestic supply of minerals crucial for defence equipment and electric vehicles - https://www.afr.com/world/north-america/us-agrees-to-fund-australian-critical-minerals-projects-20220331-p5a9js
A few excerpts below:
“Australia is well positioned to benefit from an update to a list of “critical minerals” in the US, so-called because they are central to vital industries such as energy, defence and electronics.
As foreshadowed recently in The Australian Financial Review, the US government’s scientific agency has added nickel – used to strengthen alloys found in batteries, electronics, military hardware and a range of energy technologies – to the list. Australia produces 24 per cent of the world’s supply and is perfectly positioned to benefit.
Confirmation of nickel’s addition to the list underscores analysis from the International Monetary Fund last month showing Australia was in pole position to benefit from a sixfold increase in demand for critical minerals worth $US12.9 trillion ($17.6 trillion) over the next two decades, driven by the race to hit net zero emissions.”
Rick
The Nickel market returns to normal after two weeks of chaos
“Nickel futures bottomed below the $30,000-per-tonne level, moving closer to level-pegging with China’s primary market and following several sessions of limit-down losses. The market moves signalled a return to normal after two weeks of chaos, with trading volumes now at average levels. Western sanctions against Russia over its invasion of Ukraine sparked concerns over the metal supply and supercharged existing upward momentum in the market. Earlier this month, prices briefly topped the $100,000 mark amid a vicious short squeeze as China’s Tsingshan Holding Group, one of the world’s top producers, bought large amounts to hedge its short bets on the metal.” - Quoted from https://tradingeconomics.com/commodity/nickel
Nickel trading has returned to normal and the nickel price is now back to around $28000 USD/T. Tsingshan managed to cover margin calls on its short positions by borrowing millions of dollars from a few big banks, and the short squeeze Tsingshan was facing on the 7th March is looking more like a non-event each day.
Interestingly, the Nickel Mines (NIC) share price is still trading 18% lower than it was on the 7th March ($1.34 compared to an all time high of $1.65) before the the short squeeze news emerged. Tsingshan owns 18.7% of Nickel Mines and is it’s largest shareholder. The share market feared the short squeeze would be a disaster for Tsingshan and it would be forced to sell down its NIC shares. Tsingshan is highly unlikely to sell shares in NIC with Nickel prices at $28000 USD/T.
Disc: Shares held in NIC.
Rick
The daily LME Nickel trading saga continues! LME Nickel trading resumed yesterday, 16 March 2022, at 0800. In order to achieve an orderly return to trading, the LME set a 5% daily price limit (up and down) as set out in Notice 22/067.
When trading resumed at 0800 yesterday, the 3-month Nickel price immediately fell 5% on LMEselect. Nickel trading on LMEselect was then halted to investigate a technical issue, but successfully resumed at 1400. The inter-office and Ring Execution Venues continued to function as normal throughout the day (https://www.lme.com/-/media/Files/News/Notices/2022/03/TRADING-22-072-NICKEL-CLOSING-PRICES.pdf).
Then another announcement follows on 16 March. The daily upper and lower price limits (“daily price limits”) for outright Contracts in Nickel on all Execution Venues (which have increased from 5% to 8%) and informs the market of the arrangements for the resumption of Nickel trading on 17 March 2022. For good order, this Notice also restates the daily price limits for all other base metal Contracts. This Notice should be read in conjunction with Notice 22/0671, which describes more fully how daily price limits operate on the LME’s Execution Venues.
it certainly takes a bit to keep up with the LME trading rules! :)
