China’s Greatpower to produce nickel sulfate by end-2019 in anticipation of EV boom

Greatpower’s projected nickel sulfate production target has been announced in tandem with plans to double cobalt sulfate output by the same deadline from 15,000 tpy of the material now being produced.

Nickel sulfate will be produced at Greatpower’s Zhejiang plant, which is under construction, while cobalt sulfate will continue to be produced at the company’s factory in Shaoxing, eastern Zhejiang province.

Greatpower currently imports volumes of nickel concentrate to feed its battery production, with the new nickel sulfate production capacity thought to be a move by the company to guarantee supply.

Both materials are intrinsic in the production of cathodes for electric vehicle (EV) batteries and it is thought that the company plans to ramp up production of both materials ahead of the EV market penetration anticipated in 2025. This will complement Greatpower’s existing line of traditional lithium-ion battery production, but it is unclear whether EV battery production will take precedence.

But as the company announces a ramp-up in refined nickel output, the latest statistics from the International Nickel Study Group report a January-February 2019 nickel deficit of just 5,700 tonnes, a significant 18,700-tonne contraction from the deficit reported by the INSG for the same period of 2018.

This statistic supports Sumitomo Corp’s assertion that the global nickel market deficit would almost halve to 49,000 tonnes in 2019 from 93,000 tonnes in 2018. Japan’s biggest nickel smelter estimated a 3.4% demand increase to 2.3 million tonnes while supply grows at a faster 5.5% yearly rate to 2.29 million tonnes.

“There is slightly more interest and optimism toward demand in the market. The electrification of planes, trains and automobiles is definitely increasing demand for batteries which is good for nickel,” a European trader told Fastmarkets.

Although these figures still constitute a 4,000-tonne gap in favor of demand, such a slim supply/demand margin could be an indication that the nickel market may loosen in the interim period up to 2025 when EV battery demand really takes hold, particularly with large companies such as Greatpower increasing output as early as 2019.

And a softening in the London Metal Exchange three-month nickel contract reflects a looser nickel market; the LME three-month nickel price has been struggling to breach its $13,000-tonne psychological level of late, trading at a high of $12,700 per tonne on April 18, down $530 per tonne from March 4’s $13,230-per-tonne high.

Even LME inventory nickel stocks of 175,656, a six-year low, have failed to boost the LME three-month price with bearish attitudes being precipitated by well-covered consumers with no impetus to consume nickel. And increased supply in the face of this waning demand may only serve to exacerbate the situation.

“The first quarter [of 2019] was soft and the second quarter is weaker than last year. In general [the market] is up and down but we haven’t seen a longer period of sustained trading this year. There is already sufficient material available so there is not much potential to see higher prices or greater consumption in the coming months,” another Europe-based trader said.