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Nickel CBS March 2021 — Tsingshan's battery nickel announcement hits sentiment

Highlights

The LME three-month nickel price dropped from a seven-year high of $20,110 per tonne in trading Feb. 22 to $15,948/t on March 30 — the lowest since November 2020 — on Tsingshan's announcement.

This quarter, London Metal Exchange nickel prices are set to record their worst performance since the same period a year ago after a potential game-changing battery nickel supply announcement from China's Tsingshan Holding Group Co. Ltd. depressed bullish investor sentiment. The company plans to process nickel pig iron into high-grade nickel matte that can be converted into nickel sulfate for use in the electric vehicle battery sector. Tsingshan will supply Zhejiang Huayou Cobalt Co. Ltd. and CNGR Advanced Material Co.Ltd. with a combined 100,000 tonnes of nickel matte beginning in October.

The LME three-month nickel price dropped from a seven-year high of $20,110 per tonne in trading Feb. 22 to $15,948/t on March 30 — the lowest since November 2020 — on Tsingshan's announcement.

Access the Nickel Commodity Briefing Service March 2021 Full report and Databook.

  • Tsinghan's plans could potentially trigger the most significant structural supply-side change to the global nickel market since the company brought nickel pig iron to the wider market in the early 2000s.
  • Tsingshan also announced that it plans to ramp up its nickel production in Indonesia significantly.
  • We have therefore upgraded our global primary production forecasts significantly and expect global output to rise to 3.6 million tonnes in 2025 from 2.7 Mt in 2020.
  • We expect Tsingshan's supply plans to cause the primary nickel surplus to widen to 312,000 tonnes in 2025 from 95,000 tonnes in 2021.
  • This will cause the average LME three-month nickel price to fall to $15,650/t in 2025 from $17,396/t in 2021.

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This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.

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