China NiCoLi Summit 2021: Expectations over new energy market drive nickel price volatility

CHANGSHA, May 21 (SMM) –New energy industry becomes nickel price driver amid weaker logic of pure nickel substitution by NPI, said Darius Li,  Head of nickel department and senior analyst at SMM.

Speaking at the 6th China International Nickel Cobalt Lithium Summit in Changsha, Hunan province on Friday May 21, Li said that the substitution of pure nickel by NPI has gradually peaked, which used to be one of the biggest factors dragging on nickel prices, and we need to focus on output at stainless steel mills and growth of new energy consumption and nickel sulphate supply amid the booming new energy industry.

Li expected China's NPI output in 2021 to drop to 400,000 mt with Ni content, while NPI output in Indonesia is expected to increase to 900,000 mt with Ni content. The substitution of domestic NPI by Indonesian NPI is expected to continue in 2021 as Indonesian NPI output increases further, Li added.

SMM statistics show that Indonesia produced 594,800 mt of NPI in Ni content in 2020, and China produced 515,000 mt of NPI with Ni content. Indonesia overtook China to become the largest NPI producer.

Imports of intermediate nickel products began to surge year-on-year from August 2020. China imported 342,600 mt of hydrometallurgical nickel intermediate products in 2020, an increase of 19.3% year-on-year. With the commissioning of the Liqin project in the second half of 2021, Indonesia’s hydrometallurgical nickel intermediate products will flow to China, growing imports in 2021.

Boom of new energy industry increases precursor output year-on-year. China's total production of ternary precursor stood at around 307,300 mt in 2020. China's total production of ternary precursor from January to April 2021 stood at 154,800 mt, an increase of 147% YoY. The COVID-19 affected domestic precursors output in 2020. Precursors output has begun to increase since the second half of 2020.