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(under review) [SMM Analysis] how is the Indonesian nickel wet process project progressing? Worries and worries about the Future Prospect of Nickel Sulfate
May 29,2020 14:16CST
The content below was translated by Tencent automatically for reference.

SMM5 March 29th: on May 22nd, an announcement from the cobalt giant triggered a heated discussion in the market. on the evening of the same day, the company announced that the company planned to raise an additional 6.25 billion yuan for the annual production of 45000 tons of nickel metal high nickel matte project, the annual production capacity of 50 tons of high nickel power battery ternary precursor material project, Huayou headquarters research institute construction project and supplementary liquidity. This shows that Huayou Cobalt, the largest supplier of cobalt products in China, is accelerating the layout of the industrial chain of new energy lithium materials.

With the arrival of the era of new energy vehicles, nickel, the blood-grade raw material of batteries, is a must for ambitious enterprises. From a worldwide point of view, laterite nickel deposits are mainly distributed in Cuba, New Caledonia, Indonesia, Philippines, Myanmar, Vietnam, Brazil and other countries near the equator, among which Indonesia is rich in laterite nickel resources. it makes more and more enterprises aim at this precious land and build wet-method projects in Indonesia one after another.

According to SMM, the projects currently planned to be put into production are: the projects of Liqin Mining and Indonesia's Khalida Group on OBI Island; the Wet process projects in Weidabe Industrial Park, Castle Peak, Zhenshi, Huayou and Eramet; and the projects in Castle Peak, Greenmei and Bangpu on Sulawesi Island. Located in Sulawesi Island, Huaqing Co., Ltd., together with Qingchuang International, Woyuan Holdings, IMIP, LONGSINCERE projects and Sumitomo Metal Indonesia's proposed high-pressure acid leaching project for laterite nickel ore.

The projects currently under construction are scheduled to start production in 2020, but SMM believes that the actual production schedule of some projects may be delayed. On the one hand, due to the impact of the epidemic, the progress of production may be affected. According to the latest data released by the Indonesian government's official website on May 28, the cumulative number of confirmed cases of new crown pneumonia in Indonesia has risen to 24538. Indonesia is preparing to enter a new normal life. Indonesian Health Minister Travan issued comprehensive health guidelines for the new normal, and President Joko also said that police officers would be deployed to ensure that citizens comply with epidemic prevention regulations. President Joko also said: "We want to maintain productivity, but also need to maintain the new crown of epidemic prevention safety."

On the other hand, the epidemic situation abroad continues to be serious, car companies in Europe and the United States have stopped production, and orders for precursor factories have decreased in May, resulting in a decline in demand for nickel sulfate. Since mid-March, the big three US automakers have accepted the proposal of the United Auto Workers Union (UAW) to temporarily close more than 100 car and engine factories. German giants Volkswagen, Daimler and BMW have also announced the suspension of production in Europe. In addition to European and American giants, eight major Japanese car companies, including Toyota, Nissan, Honda, Mazda, Suzuki, Subaru, Mitsubishi and Daihatsu, have also announced a moratorium on domestic car production. The domestic market is also seriously affected by the epidemic, the new energy vehicle market recession superimposed the impact of the epidemic, the power battery industry is facing a severe test.

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In terms of data, SMM data show that China produced 9900 tons of metal nickel sulfate in April, compared with 44500 physical tons, down 6.88 per cent from the previous month and 20.54 per cent from the same period last year. The decline in nickel sulfate production in April was mainly related to the shutdown of some factories, which chose to stop production to solve the problem of overstock and low-price shipments. The epidemic broke out abroad at the end of March, and car companies in Europe and the United States stopped production. Due to a certain transmission delay, orders from precursor factories are expected to decrease in May, resulting in a drop in demand for nickel sulfate. However, it is understood that nickel sulfate plants that stopped production in April will resume production in May. As a result, national production of nickel sulfate is expected to rise 4.97% month on month to 10300 metal tons in May.

At present, the resumption of work by car companies in Europe and the United States is slow, their parts factories are still gradually recovering, and the inventory of dealers is relatively high. coupled with the fact that battery factories also have some inventory, it will still take two months for new orders to be transmitted to domestic material factories. At present, domestic export orders for ternary materials have been cancelled and delayed, and export orders for ternary precursors have not been resumed, and have been reduced by 20% and 30% since April. In addition, most of the downstream digital products of ternary materials are also exported to India, Europe, the United States, and other seriously affected areas. at present, overseas markets have not yet recovered, and it is expected to wait until July before they can pick up. The overseas power market is still uncertain, and there is still a recurrence of the epidemic in some areas, or there will be procurement demand in July. The consumer market will have to wait for India to lift the ban on May 31, and if customs can be opened on time, it will also have to wait for January-February to start the procurement of raw materials. Judging from the recent procurement plan at the end of the month, except for the stable supply of Tesla industry chain, other battery factories are willing to reduce their purchases, and orders for ternary materials continued to decline in June compared with May.

"Click to view related reading: [SMM Analysis] it is still difficult for overseas car companies to resume work. The price of ternary materials is difficult to rise."

As the downstream demand continues to be difficult to recover, it is difficult to have bright spots in the fundamentals of nickel sulfate. at present, the price of nickel sulfate is mostly supported by the nickel price (cost). At present, the price of nickel sulfate fluctuates near the 100,000 mark in Shanghai, but the spot situation is not optimistic. weak consumption plus the willingness to ship to attack the spot market, it can be seen that in the pattern of other contradictions in the industrial chain is relatively not obvious, in the short term consumption disadvantage gradually occupies the upper hand in the dominant market factors. SMM predicts that it will be difficult to improve the price of nickel sulfate in the future.

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