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rpt-column-nickel\'s star performance underpinned by old and new drivers: andy home

by:Merryshine     2019-11-28
Duplicate, no change in text.
The opinion expressed here is the opinion of the columnist of Reuters. )
* Relative properties of LME metal: tmsmrt.
Global nickel inventory: tmsnrt.
Rs/2 LgOOvX, Andy House, London, May 21 (Reuters)-
Nickel has been the star of major industrial metals so far this year.
London Metal Exchange (LME)
The price has been three from April.
Panic at $16,690 a year highS.
Sanctions against Russia could be extended to the company.
But currently $14,650 per ton, LME 3-
Monthly nickel is still up 16% from the beginning of the year.
Tin ranked second in LME base metal packaging, up only 2%.
Shanghai Futures Exchange of China (ShFE)
Largely ignoring the Russian panic in London, but it has just reached its highest level of trading in three years.
Both the London and Shanghai markets have been boosted by visible declines in inventories, fuelling optimism about supply shortages.
Chart on relative performance of major LME contracts: tmsnrt.
Rs/2 LiDHlT graphics for LME and ShFE nickel inventory: tmsnrt.
Rs/2 LgOOvX LME nickel inventory has been declining every month since last August.
In 303,576 tons they is by 63,036 public tons or 17% in start 2018 and are now June 2014 since the minimum level.
Last week, shares registered on the Shanghai Futures Exchange closed at 33,000 tons, the lowest level since the Shanghai Futures Exchange was in its infancy in October 2015.
At present, the stock of 336,600 tons of integrated exchange is far lower than the high of 500,000 tons in 2016.
This reduction in visible inventory strengthens the picture of supply shortages depicted by the International Nickel research team (INSG).
In April, India\'s National Bureau of Statistics predicted a 117,000-ton gap in the global refined nickel market this year.
Prior to that, a similar deficit occurred in 2017, marking a major correction in the group\'s October 2017 assessment that the deficit will be around 53,000 tons this year.
The key to this revision is to increase the global consumption growth forecast from 5% to 7% this year.
One of the core drivers of this strong demand growth is the traditional use sector of nickel-stainless steel.
Global stainless steel production growth of 5.
8% to record 48.
1 million tons, according to the International Stainless Steel Forum (ISSF).
China is the world\'s largest producer of stainless steel, with production up nearly 5% last year.
However, production in other regions has also increased from 1.
3% for Western Europe and 22% for ISSF \"other\" categories, including Russia, Brazil, Indonesia, South Africa and South Korea.
Stainless steel production, thus nickel consumption, is expected to rise again this year, despite a slight slowdown.
However, if this is only a story of stainless steel, the impact on the fate of nickel will be even weaker.
Nickel production is also growing rapidly, especially in Indonesia, the core nickel ore supplier of nickel cast iron in China (NPI)
The industry itself is also increasingly integrated with stainless steel producers in the country.
The partial reversal of the 2014 export ban on unprocessed nickel ore has revived production in Indonesia.
According to the National Bureau of Statistics, mining production in the country increased by 74% in 2017 to 345,000 tons, and maintained this growth rate in the first two months of this year.
This effect can be seen in China\'s trade data, and the import of Indonesian nickel ore has accelerated to 3.
The first quarter of 2018 was 3 million tons, compared with 300,000 tons in the same period in 2017.
The recovery of this raw material flow is expected to lead to a rebound in China\'s own NPI production and support sustained growth outside the market.
At present, the NPI capacity in Indonesia has increased.
In other words, if this is just a story of stainless steel, then the supply gap for this year will shrink, as the National Bureau of Statistics expected in its assessment in October 2017.
However, the price of nickel is no longer just an input to the stainless steel production process.
Nickel is an increasingly diverse market, partly for stainless steel and partly for supermarkets
Alloy and battery industry.
In fact, \"Nickel
Containing the battery \"was specifically mentioned for the first time in the INSG forecast in April, because\" there is a positive impact on the use of nickel \"and this trend\" is expected to continue \".
At present, none of Indonesia\'s output growth is near lithium batteries.
Neither nickel ore nor nickel iron is suitable for conversion into the form of metal sulfuric acid used for batteries. Battery-
The manufacturer needs to refine the metal, or the nickel industry calls it \"grade 1\" material.
It is this nickel that meets the good delivery conditions of the LME and Shanghai exchanges, and it is the nickel that is leaving these exchanges now.
It is not that the battery department itself will cause the operation of visible inventory.
There are other factors in the mix, especially Vale, the world\'s largest nickel producer, which has decided to spare capacity in response to super capacity up until recentlylow prices.
But there is a feeling that the battery supply chain may begin to accumulate metal inputs that are already critical and that as a battery, this input is expected to become more and more important
Manufacturers use more nickel and less cobalt in their configurations.
In addition, since the launch of the LME Week in last October, the battery story has been inspiring investors\' enthusiasm.
LME broker Marex Spectron estimates that the current price of nickel held by speculators has reached 9% of the public interest rate, making it the largest speculative bull in the base metal market.
The traditional price drivers of nickel, the stainless steel industry, are the basis of current price advantages, but the extra spices come from the battery industry, even through the hoarding of the supply chain and the interest of investors, some pre-emptive.
There is still a potential tension between the nickel production surge used by stainless steel plants and the class 1 nickel production lag that the battery can usemakers.
But for now, both old and new drivers are pushing nickel in the same direction.
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