#Nickel - #Battery grade material Sees a Price difference emerging due to potential nickel demand for #EV’s

@Scotiabank new report:  "Is The Nickel Market On Its Way to Becoming Bifurcated? Why Understanding Class I, Class II (and the EV Context) Matters…."

 

Attachment 1 shows the 1-year spot price of nickel and attachment 2 the 1-year LME nickel warehouse stocks level.

 

Below is a comment from Scotiabank how the nickel price has been rising on potential battery demand for electric vehicles (EV's).

 

"Is The Nickel Market On Its Way to Becoming Bifurcated? Why Understanding Class I, Class II (and the EV Context) Matters….: In line with the definition provided by the International Nickel Study Group (INSG), refined nickel (class I) includes products such as electrolytic nickel, pellets, briquettes, granulates, rondelles, or powder/flakes with a nickel content of at least 99%. Charge nickel (class II) includes products such as ferro-nickel, nickel oxide, utility nickel, or nickel pig iron (NPI) with a nickel content below 99%. Recall that the difference between the two classes of nickel was recently highlighted by VALE given the company's current frustration in its inability to fully capture the premium for all the class I nickel it produces, because a portion of its higher quality class I output (and class I suitable for batteries) had been being sold to produce stainless steel. Unsurprisingly, VALE is making changes internally to change this and capture more value….

 

 

So, Is there a Shortage of (Class I) Nickel for Batteries? Not for a while in Scotia's view. The growing widespread adoption of electric vehicles (EV) in both the Western World and in China has created significant attention and investor interest in several EV inputs including cobalt, nickel, lithium, and copper. While EV demand for nickel currently represents only a minor ~3% of the market, demand is anticipated to materially increase over the next decade. Although growing non-stainless demand is a very positive long-term backdrop for the market, we do not see a looming near-term supply crunch for nickel. Global nickel inventories, while substantially improved (ie. drawn down) from 2016 levels, still  remain at historically elevated levels. Looking at visible inventories at a more in-depth level, Scotiabank Senior Base Metals Analyst Orest Wowkodaw notes that there are currently 261,000 tonnes of Class I nickel briquettes sitting in LME warehouses, representing 78% of total LME inventories. Conservatively assuming 100% of the nickel stored in Shanghai and in Chinese bonded warehouses is cathode, briquettes represent ~60% of global nickel inventories. The stainless steel industry consumes primarily nickel cathodes but also nickel briquettes, while the non-stainless sector (including batteries) consumes primarily briquettes. In 2018, Orest forecasts only 31% of nickel demand from the non-stainless sector. While he forecasts this consumption mix to only slightly increase to 35% non-stainless by 2022, he anticipates the size of the overall nickel market to increase by 239,000 tonnes or by 11% during this five-year period. On a more positive note, Orest continue to see a looming shortage for Class I nickel developing next decade as EV demand accelerates during a very long period where prices to develop new greenfield nickel supply remains below incentive levels. In his view, the viable greenfield project pipeline for future Class I nickel supply appears bleak. Furthermore, the appetite to develop another large scale multi-billion dollar HPAL laterite project remains practically non-existent.

 

While current visible nickel stocks of 355kt (equal to 56 days of consumption) would suggest there is still plenty of available nickel in the market, the rate of YTD inventory decline has been markedly more pronounced than Orest had previously anticipated (he currently forecast year-end 2018 visible stocks of 373kt or 61 days and it's only June). A recent discussion with commodity consultants WoodMackenzie suggest that a large portion of these draw-downs could be attributed to speculative hoarding."

 

 

 

 

#Lithium: “While we hesitate to claim ‘this time is different,’ we see several key reasons why this may actually be true for lithium” @GoldmanSachs @FT

Investor concerns about a wave of supply of the electric car battery material from new mines are unfounded

Lithium sell-off is 'overdone' — Goldman Sachs

Developing new mines will be hard but demand will rise, analysts said

July 3, 2018

The sell-off in lithium equities this year is "overdone," according to Goldman Sachs.

Investor concerns about a wave of supply of the electric car battery material from new mines are unfounded, according to the investment bank, one of the biggest commodity traders.

Instead, it will be harder to develop new lithium mines that most people think, Goldman Sachs said. At the same time, demand for lithium is expected to rise fourfold by 2025, due to rising sales of electric cars.

"Coupled with ongoing rising demand expectations as auto OEMs look to electrify their fleets, we expect lithium markets to remain sufficiently tight to handsomely reward incumbent producers," Goldman Sachs said.

The bank recommended investors buy US producers Albemarle and FMC Corp, predicting their shares could rise by a further 34 per cent and 30 per cent respectively.

Shares in the world's largest producers of lithium, a white metallic powder which is used in all electric car batteries, have slumped this year, following double-digit gains in 2017.

Investors have grown increasingly concerned about a wave of new lithium projects that have sprouted up from Australia to Nevada to take advantage of rising prices.

Prices of lithium carbonate, a key lithium ion battery raw material, have increased nearly 40 per cent in the past 12 months on the back of increasing electric car production, according to Benchmark Minerals Intelligence.

But lithium is not like other commodities, according to Goldman Sachs.

The current market is small, with only around 200,000 tonnes of production a year, and has to grow rapidly to meet demand. The only other time commodity production has had to grow so fast was in the early 1900s, when oil and natural gas production almost quadrupled in ten years, Goldman Sachs said.

"While we hesitate to claim 'this time is different,' we see several key reasons why this may actually be true for lithium," Goldman said.

https://www.ft.com/content/75e6760c-7ed1-11e8-8e67-1e1a0846c475?utm_campaign=digest

#Lithium's Top Challenge Is Finding Funds

Despite bullish forecasts - especially with accelerating production of #EV's electric vehicles -- lithium may have a funding problem. 

Banks are wary, citing everything from the industry's poor track record on delivering earlier projects to a lack of insight into a small, opaque market. 

Without more investment, supplies of the commodity could remain tight, sustaining a boom that already has seen prices triple since 2015.

Lithium companies will need to invest about $12 billion to increase output fivefold by 2025 and keep pace with the world's growing appetite for batteries, according to Galaxy Resources Ltd., an Australian producer seeking to build further operations in Argentina and Canada. 

Developers say that, so far, projects aren't getting financed fast enough to achieve that leap.

Lithium's Top Challenge Is Finding Funds, Not the Battery Metal

Mariko Ishikawaupdated an hour ago

Altura Mining's lithium operation on May 2018. Source: Altura Mining."

Battery producers and automakers "have absolutely no clue on how long it takes to be able to put a mining project into operation," said Guy Bourassa, chief executive officer of Nemaska Lithium Inc., which spent about 18 months piecing together a complex C$1.1 billion ($830 million) funding program for a mine and processing plant in Quebec. "There will be a big problem -- it's going to be an impediment" to raising supply, he said.