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Output of electrolytic nickel, a form of nickel metal made from sulfate by Chinese producers in Indonesia, has been rising steadily since last year. The volume jumped to a peak as high as 30,000 tonnes per month during the first quarter of 2024, market sources said. And they estimated that it could increase by another 1,000 tpm in May.
“Funnily, it’s mostly new energy vehicle [NEV] firms that are making metals these days,” a veteran trader said.
This development has come at the same time as a slowdown in EV sales growth in China following the country’s discontinuation of a subsidy program, which had led to earlier rapid growth in the industry. Battery chemicals such as nickel sulfate and cobalt sulfate traditionally go into precursor plants to feed downstream EV demand, but they can also be converted to refined metal, at a time when that is commanding higher prices.
The benchmark London Metal Exchange 3m (Aug 24) Official price of nickel has been on an upward trend, surging to a historic high at $21,625 per tonne on May 20, from $16,795 per tonne at the start of the year.
Nickel sulfate prices rose too, tracking the uptrend in the futures market, but market sources largely attributed this to higher input costs, a result of the elevated nickel prices, rather than any demand turnaround in the EV sector.
Fastmarkets most recently assessed the price of nickel sulfate, min 21%, max 22.5%; cobalt 10ppm max, exw China, at 30,500-31,000 yuan per tonne on May 17. This was up by 2.5% week on week, and up by 3.9% from 25,000-26,000 yuan per tonne at the start of the year.
Facing the sluggishness in the EV sector, battery makers instead have resorted since last year to turning the chemical into the more valuable metal. This trend has strengthened in recent months with the arbitrage widening between the two types of product.
For example, Fastmarkets has heard that a major nickel producer was planning to expand output of electrolytic nickel by 1,000-2,000 tonnes per month. And a producer in Indonesia was heard to be holding back some it its intermediary products to use in metal refining, instead of feeding nickel sulfate.
One nickel producer source said that there was no doubt that the growth in nickel metal output would continue in May with downstream orders from the EV sector down in the months ahead.
But a second producer source did not expect this growth to be sustainable because, he said, producers were already all operating at almost full capacity.
Dylan Duan in Shanghai contributed to this article.
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