SMM Analysis: Policies on new-energy vehicles fire up nickel, cobalt outlook

SHANGHAI, Dec 21 (SMM)－SMM believes the overall policy support on new-energy vehicles is painting a bright outlook for cobalt and nickel in 2018. We expect Chinese domestic cobalt price to go up by 18% next year to average 450,000 yuan/mt, and nickel price to trade between $9,000 and $14,500/mt.

Cobalt to see active demand

Glencore has restarted operations at its Katanga copper-cobalt mine in the Democratic Republic of Congo and it is expected to produce 11,000 mt and 34,000 mt of cobalt in 2018 and 2019 respectively. Such expansion plans suggested the mining major looked to increase its grip on the market.

SMM believes the cobalt market would become a sellers’ market with Glencore and a number of traders controlling the majority of supply.

Demand for cobalt, on the other hand, would continue to be active due to the fast growth of new-energy vehicles. We see a rising market as the path of least resistance in 2018.

Fundamentals support nickel   

China’s policy direction on new-energy vehicles looks set to drive demand for nickel as it favours batteries with high-energy density such as NCM battery which is nickel rich.

The new import tax on nickel in 2018 – higher for refined nickel and lower for nickel sulfate – also gave a boost to nickel prices in the near term.

Separately, Indonesia’s relaxation of laterite ore export would drive up the expansion of global nickel pig iron (NPI) capacity in the next three years. In 2018, China would account for about 66% of global NPI output of 700,000 mt. SMM believes by 2020 Indonesia and China would have similar market share in the global NPI industry.

Coupled with decent macroeconomic outlook for both China and western countries in 2018, SMM is bullish on nickel demand and expects prices to trade at $9,000-14,500/mt. 

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