Nickel Price Rebound - Supply Cuts & Rising EV Demand
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- Опубліковано 29 вер 2024
- Recording date: 24th January 2024
We have seen the 5% move - to the downside - from our last discussions when nickel prices were bumping up against the top end of their recent range in the $16,800-$17,000 and we’ve tested $16,000 level multiple times with a few minor breaks below.
This is creating the capitulation which heralds a bottom - I had been calling for a turn to happen in the New Year (either post the calendar or Chinese New Year - the latter most likely) - recent events make that even more likely and seeing some green shoots of the positive turn already
The Capitulation
Wyloo putting its Mincor operation on care & maintenance which it just bought a year ago. Cassini 1.2 Million tonnes at 3.3% nickel.
BHP in turn is putting its Kambalda concentrator (fed by Mincor) on C&M which effectively cuts out a number of operations paths to market. It also impacts the amount of Mt. Keith concentrate which can be processed because the flash furnace needs to blend feeds.
BHP looking at a write-down on their nickel business (based on reported data, their sulphate plant not producing or selling much, cost pressures across rest of the business) and including their Oz Minerals acquisition and ni.
First Quantum suspending mining at Ravensthorpe (will feed plant from stockpiles to save cash).
South 32 reviewing their Cerro Matoso FeNi operation - this is a 40-year-old laterite mine - remember laterites are relatively easy to high-grade.
Majors tend to be behind the curve and the production cuts they announce end up helping create the bottom.
The Green Shoots
Seen a small increase in stainless steel and NPI prices in China (despite the negative mood).
Beginning of restocking in EV and supply chain:
Thesis for this year - restocking to kick in to drive double-digit demand growth and push prices back up to $20K by year-end!
US 2023 year-end sales 1.4 million - up 50% for the year and still exiting with December up 42% - hardly collapsing…..Global plug-in sales up November up 31% (total YTD up 38%)
Company News
SPC Nickel published solid initial resource at West Graham - 19 Mt at 0.42% (0.57% Ni-eq), is an open pit.
Brazilian mining ministry endorsement of the Plan of Economic Assessment (PAE) confirms that Centaurus Metals has met all technical requirements for the mining lease and can implement the project - one step closer to the final permit.
Talon Metals had splashy results 5.93-meter intercept of high-grade massive nickel and copper mineralization assaying 2.92% Ni and 1.73% Cu (4.09% NiEq), which includes a 2.2-meter (7.2 feet) intercept of high-grade massive nickel and copper mineralization assaying at 6.84% Ni and 3.80% Cu (9.31% NiEq). The other 2 holes released were not too spectacular.
Visionary Metals next set of assays from its Wyoming project - very greenfield project - targets were a little narrow, but still early days.
Archer Exploration - exploring Grasset deposit originally discovered about a decade ago by Balmoral resource. Some OK grade but narrow and deeper.
Premium Nickel couple of interesting results and decent grades with some width (but no true widths) - but please compare it to Mincor resources which is now going to be closed.
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I'm gearing up for a bull market ....
With all of the mine closures and the nickel price in the toilet, where will the US get its nickel from to supply the 15 or so gigafactories, especially if Indonesian Nickel does not have a free Trade agreement and dos not qualify for tax rebates and incentives.
Why is Indonesia throwing away money? Presumably this nickel price is not optimizing their revenue...
They're cementing their market share to have more control of supply and prices. They can operate at low costs and take a hit on their short term revenues, while Western players go out of the market. Several of the Indonesian operations are also vertically integrated, meaning that margins are still achievable further downstream.
That’s the only rational explanation. I thought their soil-based nickel resource is rather limited though and that it would make more sense to monetize it carefully?
Mark, please stop constantly saying "you know" -- annoying & unprofessional. Matt seems to be mirroring it to a small degree because usually he uses the phrase more sparingly. Otherwise, the usual informative discussion.