Precursor and cathode producers in China have cut or are considering cuts to their operations due to high nickel sulphate prices, according to Rystad Energy.
“If nickel prices continue to hover around high levels, for instance, at or above $40,000 per tonne, it is estimated that more processing companies would further cut operations and stop purchasing nickel sulphate,” says analyst Echo Ma. “In a worst-case scenario, [they could] stop operations until the nickel prices are corrected to levels they could digest or that they could filter through via price hikes to companies further downstream.”
The uncertainty in the nickel market following a shockwave at the LME trading earlier this month is also impacting other battery raw materials including cobalt. The London exchange suspended trading of nickel on 8 March after its 3-month nickel contract price surged to $101,365/tonne, Kallanish notes.
LME nickel prices are often used as the benchmark to price nickel raw materials, including mixed hydroxide precipitate (MHP), which is used to produce nickel sulphate. Battery precursors and cathode prices are also based on nickel prices.
“The broad consensus is that nickel prices will remain at a higher level after trading is resumed considering low stocks on the [LME] exchange and unsolved supply uncertainties over Russian nickel,” adds Ma.
LME resumed nickel trading on Wednesday 08:00 GMT but halted activities on its LMEselect platform shortly after due to a technical issue. As the market opened, the 3-month price fell immediately to $45,590/t, which was the pre-set 5% lower daily price limit. LMEselect allowed a small number of trades to be executed below this price limit, which will now be cancelled. Trading in the inter-office market and the Ring were operating normally with the daily price limits still in operation.
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Very good overview of the weekly steel market.