- Write by:
-
Thursday, June 16, 2022 - 14:30:12
-
664 Visit
-
Print
Mining News Pro - Nickel prices will edge higher in Q322 as Chinese stimulus measures improve the demand outlook and the Russia- Ukraine war continues to disrupt supply, before falling towards the end of the year as refinery output ramps up, market analyst Fitch Solutions forecasts in its latest industry report.
Covid-related restrictions in China had weakened demand in Q222 and saw prices fall to a quarterly low of $25,675/tonne on June 14. A number of the stimulus measures will increase nickel demand, including the new rules for increased quotas on car ownership, reduced purchase taxes for certain vehicles, and incentives to increase infrastructure construction, Fitch says, adding that together, these measures will help reverse the trend of declining demand seen over Q222 and push prices higher in the short term.
On the supply side, the ongoing war in Ukraine will continue to weigh on Russian production and exports. While Russian nickel firms have not been directly targeted by sanctions, they are impacted by supply chain and financing difficulties as Western firms increasingly abandon the Russian market, Fitch notes.
Freight and logistics have also become more complex as insurance and transport becomes less readily available. Nickel importers in the West are increasingly shunning Russia-origin metals, primarily due to risks of further sanctions, concerns over the extent of sanctions recently announced, and reputational risks associated with deals with Russian entities while the crisis continues. Reduced supply from Russia to global markets will have a significant impact on prices, Fitch forecasts, as in 2021 the country was responsible for 9.3% of the world’s nickel mine production and around one fifth of refined nickel.
In Q422, however, Fitch expects prices to fall slightly as refinery production ramps up, especially in Indonesia. The Indonesian government’s ban on nickel ore exports, implemented in January 2020, caused short-term supply issues but has also led to greater investment in the country’s downstream industry and we expect double-digit growth in nickel output in Indonesia over the remainder of the year.
Low levels of LME nickel stocks continue to pose threats to volatility in the short term, Fitch points out. Along with the unravelling of Xiang Guangda’s short position that led to prices momentarily breaching $100,000/tonne, low stocks were a factor which contributed to the price spike in March 2022 and which continue to pose upside price risks.
From a multi-year high of 264.6kt in April 2021, inventories fell to 75.0kt on March 8 and are slightly lower still as of June 6, at 71.4kt.
These low levels increase the possibility of sharper price rises in future in the event of significant supply- demand mismatch in the short term, the analyst says.
Short Link:
https://www.miningnews.ir/En/News/621556
South African diversified miner Sibanye Stillwater is discussing with lenders to temporarily lift limits on borrowings, ...
The Philippines said on Friday it aimed to add three more processing plants in the effort to develop a downstream ...
Copper climbed above $10,000 a ton as predictions for tighter global supplies and rising consumption in electric ...
Canada’s mining industry is pushing for an carveout to the federal government’s proposed increase to capital gains ...
Iron ore futures fell to their lowest in more than two weeks, pressured by an inventory accumulation at Chinese ports ...
Australia will spend A$566 million ($373 million) over the coming decade to map out resource deposits with a focus on ...
Indonesia’s nickel reserves are sufficient for expanded processing operations, an investment ministry official said on ...
China issued draft rules on Wednesday to regulate its lithium battery market, after rapid expansion in the sector hit ...
Imports of iron ore by China, the world’s biggest buyer, in 2024 are expected to be around 1.17 to 1.18 billion metric ...
No comments have been posted yet ...