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Nickel prices must rise to meet battery demand - AABC

Metal News - Published on Wed, 30 Jan 2019

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Higher nickel prices are required to incentivise supply of nickel sulphate for electric vehicle batteries, particularly given lower cobalt prices, delegates heard today at the Advanced Automotive Battery Conference in Strasbourg, France. Mr Denis Sharypin, head of market research at Russian producer Norilsk Nickel said that supply of nickel increased by 7pct last year to about 2.19 million tonne, but demand increased by 8pct to 2.33 million tonne, increasing the deficit to 147,000 tonne, from 131,000 tonne in 2017.

The battery sector accounted for 124,000 tonne of consumption last year, and while overall nickel demand is expected to increase at a compound annual growth rate of 5pct to 2025, demand from the battery sector is estimated to climb at a CAGR of 18pct over the same period.

But there are concerns about the availability of class 1 nickel, which is required for the production of nickel sulphate used in battery chemicals. Around 70pc of nickel output is used in stainless steel production, which is still growing. And around 60pc of nickel is produced from laterite rather than sulphide ores.

Mr Sharypin said that the nickel market will remain in deficit in the coming years, and Indonesia is likely to reinstate a full ban on exports of nickel ore from 2022, further reducing supply.

Ms Anne Oxley, technical director at project developer Brazilian Nickel said that "For the nickel industry to supply the demand that's definitely coming, the nickel price needs to be much higher. Major miners are not looking to expand nickel production. The nickel is there in the ground but the question is whether it will come out in time."

There have been large spikes in nickel prices in the past. The market reached USD 50,000 per tonne in 2007, but has since fallen to USD 10,000 per tonne, which has reduced investment interest in new projects. Cobalt is typically a by-product of nickel production and the recent fall in cobalt prices to around USD 20/lb from USD 44/lb has further reduced the incentive to bring new capacity into operation.

But with the nickel supply deficit expected to increase in the coming years, "it could easily go to USD 50,000 per tonne again," Oxley said. "[Annual demand for] stainless steel is still growing by at least 4pc. Even without the boom in EVs there's still likely to be a shortage of nickel. It will take a lot of projects at least 10 years to get to production."

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Posted By : Rabi Wangkhem on Wed, 30 Jan 2019
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