Is the sharp drop in nickel prices caused by high matte? [agency Review]

On January 24, the first batch of high matte products in Qingshan Industrial Park of Indonesia was collected and officially shipped to China. The total ship volume is about 500 tons of matte. At present, there are three high matte production lines in the park, with a monthly production capacity of about 3000 tons of nickel.

The price of nickel rose from the limit on January 24 to the limit on January 25, which was hotly discussed by the market. The author believes that the shipment of high matte back to China is only the fuse, not the most fundamental reason. The fundamental reason is that after the previous forced position market caused a sharp rise in nickel prices and the profits of downstream enterprises were squeezed, they jointly reported the existence of market price manipulation, superimposed by the Shanghai Futures Exchange to raise trading margin, and the situation in Russia and Ukraine triggered a rise in risk aversion before the Spring Festival, and bulls made profits to reduce their positions. At present, the price difference between nickel sulfate and nickel iron is about 33200 yuan / ton, the economic conditions are just met, the nickel iron is not absolutely surplus, and the actual impact of high nickel matte on the price is limited.

The influence of High Ice Nickel on the pattern of Nickel Industry chain

At present, the nickel industry chain can be divided into two main lines: one is "laterite nickel ore-nickel iron or nickel pig iron-stainless steel", which is mainly produced by RKEF process (rotary kiln-submerged arc furnace smelting), which is the main application of nickel downstream; the other is "nickel laterite or nickel sulphide ore-hydrometallurgical intermediate or nickel sulfate-battery", which is the potential increment of nickel demand.

There are six main ways to prepare nickel sulfate:

First, nickel laterite-nickel intermediate-nickel sulfate: wet high-pressure acid leaching path, this industrial chain approach to Ruimu, Sumitomo Group, Huayou and Liqin as the representative, the use of low-grade laterite nickel ore for crushing and washing, and then the oar after high-pressure acid leaching to produce MHP (nickel hydroxide) and other wet smelting intermediates, the final refining can produce nickel sulfate. This method can make the total cash cost of the enterprise relatively low, the production process is relatively safe, and the supply of raw materials is relatively stable, but the energy consumption is relatively high, so it is the main process used to prepare nickel sulfate in our country at present.

The second is waste-nickel sulfate: nickel sulfate is produced by wet smelting through waste nickel alloy, degraded waste, waste battery, waste slag containing nickel, copper and cobalt, etc. In this way, the cost of occupying enterprise cash is low, but the supply of waste is unstable.

Third, nickel bean or nickel powder-nickel sulfate: nickel bean, nickel powder and other direct oxidation acid leaching, after fine Filter to produce nickel sulfate. This method has the advantages of low investment, short cycle and relatively simple technological process. However, this method is expensive and needs to wait for the market situation. Only when the total cost is upside down with the price of nickel sulfate, the precursor manufacturers will dissolve nickel beans or nickel powder to form liquid nickel sulfate, which will directly enter the ternary precursor production line and save the crystallization cost.

Fourth, nickel sulphide ore-high nickel matte-nickel sulfate: low nickel-sulfur is obtained by fire smelting, and then the low-nickel-sulfur converter is blown into high nickel matte, and finally high nickel matte is produced by refining.

Fifth, laterite nickel ore-nickel iron or nickel pig iron-high ice nickel-nickel sulfate: fire smelting path, represented by Qingshan Group, Shengtun Mining and Huayou Company. The high-grade laterite nickel ore is dried, and then the dry ore is reduced in a pre-reduction rotary kiln to obtain molten high nickel pig iron, which is further vulcanized to produce high nickel matte, and finally produces nickel sulfate after oxygen leaching and refining.

Sixth, laterite nickel ore-low ice nickel-high ice nickel-nickel sulfate: fire smelting path, represented by Vale and Zhongwei Company. High-grade laterite nickel ore is dried, and then the dry ore is subjected to melting, carbon sulfurization, reduction roasting, calcination and other processes to produce low nickel sulfur, sulfurization and purification to produce high nickel matte, and finally to produce nickel sulfate after oxygen leaching and refining.

Among the above processes, the first three are commonly used. The technology of Qingshan Group has opened up the pyrometallurgical production line of "laterite nickel ore-high ice nickel-nickel sulfate", and the essential process of smelting is still the mainstream nickel-iron smelting process RKEF. The core of the process is that after RKEF is made into molten high nickel iron, stainless steel is not further made, but high matte nickel is prepared by converter vulcanization. In this way, the converter can be built directly by using the existing nickel-iron smelting RKEF production line, and the new investment is not much. Then, downstream products such as nickel sulfate can be produced from high matte. After the production line is opened, several major products of the nickel industry chain are linked, including ferronickel, nickel sulfate, electrolytic nickel and stainless steel. There is a competition for resources between high nickel matte and stainless steel, which is expected to convert the excess nickel iron production capacity into high nickel matte, and then produce nickel sulfate, thus alleviating the gap of nickel sulfate due to its high dependence on imported nickel intermediates.

Driving force of large-scale mass production of high nickel matte

The driving force of large-scale mass production of high nickel matte mainly lies in the price difference between nickel sulfate and ferronickel. According to the calculation of SMM, according to the analogy analysis of the cash cost of Indonesia's Vale and the process of pressure leaching of nickel, only when the price difference between nickel sulfate and ferronickel is higher than 33000 yuan / ton can it have the power to turn nickel pig iron into high matte nickel. However, the above estimates are only estimates, and the specific values have to wait for the release of the pricing nickel coefficient of high matte.

On March 3, 2021, the price of electrolytic nickel is about 139600 yuan / ton, the price of battery-grade nickel sulfate is 37500 yuan / ton, which can be converted to 170460 yuan / ton according to 22% nickel content, and the price of ferronickel is 1180 yuan / ton, which can be converted to 118000 yuan / ton according to the amount of nickel metal. The price difference between nickel sulfate and ferronickel is about 53700 yuan / ton, showing an obvious premium. Therefore, at that time, the willingness of ferronickel to switch to nickel sulfate production was relatively strong.

What is the economy of conversion at present? Recalculated according to the price of nickel on January 24, the price difference is just enough to meet the conditions for conversion. The price of electrolytic nickel is about 166600 yuan / ton, the average price of battery-grade nickel sulfate is 39500 yuan / ton, the amount of nickel metal is 179550 yuan / ton, the average price of high nickel pig iron is 1462.5 yuan / ton, the amount of nickel metal is 146250 yuan / ton. The price difference between nickel sulfate and ferronickel is about 33290 yuan / ton, which is slightly higher than the estimated cost of converting ferronickel to high matte. At this time, converting ferronickel into high matte nickel and selling it to nickel sulfate enterprises is almost the same in economy as selling ferronickel directly to stainless steel plants.

Behind the price difference, it actually reflects the supply and demand of ferronickel and nickel sulfate. The potential factor for the conversion of ferronickel to high matte is the excess of ferronickel. Is there a surplus of ferronickel in the future?

China's demand for nickel mines is highly dependent, with more than 90% of its nickel mines imported from the Philippines. In 2021, due to the continuous damage of heavy rainfall to the mining area, the output of Philippine nickel ore decreased and the grade of nickel ore decreased. But at the same time, China's nickel pig iron production is also declining year by year, the current nickel ore port inventory is higher than the same period last year. The price of nickel rose sharply in the early stage, but the ore price did not change significantly, the raw material inventory of nickel pig iron manufacturers was sufficient, and the constraint of nickel ore supply was small.

In terms of Ferro Nickel, SMM data show that China's nickel pig iron production is likely to fall to 390000 tons (nickel metal) in 2022, down 10 per cent from a year earlier, while Indonesian nickel pig iron production is likely to increase to 1.16 million tons, up 32 per cent from a year earlier. The combined growth rate of China and Indonesia is expected to reach 18%. Among them, according to the production list of Indonesia in 2022, it is optimistically estimated that Indonesia will increase its nickel pig iron production capacity by 811000 tons this year. In addition, in recent years, with the continuous release of Indonesian nickel pig iron production, the production of nickel pig iron returned to China has increased year by year, and China's nickel and iron imports are expected to be 700000 tons in 2022, an increase of 17.6 per cent over the same period last year. Whether Ferro-Nickel is in excess or not, we need to closely track the progress of new capacity in Indonesia and the change of stainless steel capacity in China.

"View the SMM nickel industry chain database

From a long-term point of view, high ice nickel will contribute to the energy revolution. High nickel matte can reduce the production cost of high nickel ternary battery, inject strong power into the development of new energy vehicles, and change the application distribution of nickel in stainless steel and batteries at the present stage. Excluding the export restrictions of resource-advantageous countries, the sustained output of high matte will shift the long-term focus of nickel price down.