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COLUMN-China\'s Tsingshan rains on nickel bulls\' party: Andy Home

by:HGB     2020-07-02
(
The opinion expressed here is the opinion of the columnist of Reuters. )
* LME nickel price: tmsnrt.
Rs/2 CSjxOa, Andy House, London, October 30 (Reuters)-
Did nickel lose its buzz?
The potential boost to demand from the electric car revolution has boosted the bull market.
Nickel is expected to be one of the winners for more efficient batteries.
The price of nickel on the London Metal Exchange soared 63% between October 2017 and April 2018 to three-
The annual high is $16,690 per ton.
It is now trading for $11,750.
Trade war anxiety played a role in falling prices.
But nickel has its own concerns.
The assumption about how nickel prices and supply chains adapt to new drivers of electricity demand has just been overturned.
A step forward, the Chinese steel giant Qingdao Holding Group has disrupted the stainless steel supply chain and is now preparing to do the same with nickel.
This is not good news for nickel bulls.
Figure for price of LME nickel: tmsnrt.
Rs/2 CSjxOa Tsingshan is part of a consortium of Chinese companies that announced last month that they intend to produce batteries
Nickel and Cobalt grade in Indonesia.
The group includes Contemporary Amperex Technology and GEM Co, a lithium battery giant. Ltd. .
Qingdao will supply nickel and take the lead in operation
Stage processing of nickel hydroxide intermediates, which can then be converted into nickel sulfate, the preferred nickel form for lithium
Ion battery manufacturers
Qingdao is already the main mining and processing person of nickel ore and converts it into nickel iron (NPI)
The molovali industrial park in Sulawesi provides feed for its new stainless steel plant.
It will use different processing routes for the proposed 50,000-
Batteries-metric tons per yearMaterial Factory. High-pressure-acid-leaching (HPAL)
Technology has a disturbing history of operational problems and slow slopesups.
After six years of operation, Brazil\'s Vale is still struggling with its Goro plant.
However, Qingdao offered to build one faster and cheaper than anyone thought possible.
If it can do that, it will reshape the nickel market and undermine the bullish claims of rising prices.
According to the International Nickel research group, Indonesia\'s nickel production increased by 74% last year to 345,000 tons, and increased by 65% in the first seven months of this year.
This supply wall does not put the nickel bulls in trouble, as there is a consensus that because of the high cost of converting nickel into nickel sulfate, no one will find a way around the battery.
On the contrary, with the existing suitable nickel producer having reached the highest price, the price must rise in order to motivate the new battery
The argument begins, the ability to rank.
The research firm CRU estimates that prices will have to rise above $18,000 a tonne to trigger investment in Qingdao\'s HPAL plant. (
\"CRU Insight\", October. 22, 2018)
However, Qingdao said the cost of capital was $0. 7 billion, and according to CRU, the cost of capital per ton of new capacity was $14,000.
Tsingshan also said the plant could be put into production by the end of next year, which is \"unrealistic\" according to Wood Mackenzie researchers \". (
\"Qingdao nickel and stainless steel battery raw material plan\" in October \". 25, 2018)
\"The existing HPAL factories around the world take four to seven years to build, ramps
\"Overall, this will increase by two to five years and capital expenditures will reach billions of dollars,\" WoodMac notes . \".
There may be many kinds of plants.
It acknowledges that this indicates the first phase
The operation may be \"10,000\" in 2019 (Tons per year)
We know that the pilot immersion plant in the presence of molovale somehow got involved.
\"In a relatively quiet place, it is already operating a pilot plant, typical of Qingdao.
This is the company\'s reputation for innovation and disruption.
One is to deny its ability to close the processing circuit between nickel ore and nickel sulfate in the record --breaking time.
In 2014, when Indonesia banned the export of unprocessed ore, including nickel, a group of Chinese nickel companies came to Indonesia to build NPI factories.
However, Qingdao\'s ambition is far beyond the first.
Stage processing frame navigation ore ban.
It built a state. of-the-
Art stainless steel complex with locally mined nickel and chromium as raw materials.
There are currently 20 nickel ore processing facilities on the Morowali site to feed 1.
Convert 5 million tons of nickel iron into 3-
Million tons of stainless steel per year.
Indonesia is now the sixth.
The largest alloy producer in the world.
Factories in Indonesia are so efficient that Qingdao is facing the opposite
Chinese authorities have conducted dumping investigations after mainland producers complained about a large number of cheap importers.
The company also disrupted the price of stainless steel, providing a fixed price
Price contracts without alloy surcharge, which is a traditional way of price fluctuations in key inputs such as nickel.
Attacks on surcharges may be strongly resisted by other producers, but production capacity is 8 million tons, accounting for about 15% of global production and production is low
According to Citi analysts, the cost base, Qingdao\'s \"offer may be very attractive to customers \".
It turns out that Qingdao is a very disruptive force in the stainless steel field, which is why its nickel plan is taken seriously by the market.
INCREASED LONG-
It remains to be seen whether Tsingshan can deliver the HPAL plant on time and on budget, but it wants to crack the desire of nickel ore --
The processing challenge of nickel sulfate is obvious.
The company is actively trying another potential route in Indonesia.
According to CRU, the company has partnered with Chinese co producer Hua you to build nickel capacity in Weda bay, convert ore into NPI and then into matte
\"The economic benefits of this route may not be as good as the HPAL process, but obviously it will not stop the Tsingshan attempt,\" CRU said . \".
In addition, others will certainly follow suit.
Whether nickel production will usher in another technological breakthroughthrough?
Remember, NPI itself is a Chinese.
Since then, there has been a revolution in the way nickel is processed, and the market has been suffering from negative price consequences.
If Qingdao can design a low
The cost of converting ore into batteries
Grade sulfuric acid, which will have a significant impact on nickel price expectations.
It will also reconnect the nickel market, with the possibility to split the nickel market into two parts using two different processing routes for two very different end services
Use in the form of stainless steel and battery material.
One thing is for sure.
Citing CRU, Qingdao has just \"increased uncertainty for a long time
A long-term view of nickel prices \".
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