Nickel sulphate to maintain discounts against nickel as lower subsidies dent demand

SHANGHAI, Aug 19 (SMM) – Nickel sulphate prices in China are likely to remain in a discount against refined nickel in the short term, as demand weakens after the government sharply scaled back subsidies to electric vehicles.

The discounts of battery-grade nickel sulphate against nickel briquette widened an average of 3,600 yuan/mt in Ni content in the week ended August 16, showed SMM assessments.

New energy vehicle sales in China almost halved in July, the first full month after the subsidy cuts took effect. Wholesale data from the China Passenger Car Association (CPCA) showed that new energy passenger car sales declined 48% from a month ago and 4.2% from a year ago to 68,800 units last month. Sales of pure electric models dropped 54% month on month but rose 9% year on year, while sales of hybrid ones fell 16% month on month and 27% year on year.

The government needs to take steps to lower the risk of a “hard landing” scenario, while the NEV industry transitions from being policy- to market-driven, said Cui Dongshu, secretary-general of the CPCA.

The global vehicle electrification, however, is expected to sharply boost demand for nickel in the long term.

Australia’s Centaurus Metals Ltd. earlier this month said it had reached an agreement to acquire a large-scale nickel sulphide project from Vale SA in northern Brazil.

BHP is also accelerating the development of its Nickel West division, to get a slice of the impending battery boom.