Nickel spot trend
According to the data monitoring of the SunSirs, the nickel price dropped sharply again on the 4th, with a quotation of 108,300RMB/t, down 3.04% compared with the previous trading day, and decreased 3,000RMB/t in one day, down 26.57% compared with the highest price of 147,483.33RMB/t on September 3 of this year, nearly 30%, a new low since July 17. On July 4, NIM 2002 reached a minimum of 103,360RMB/t, a new low since July 10, with a decline of more than 3%. The market has basically digested the negative sentiment of the ban on mining, and the downstream consumption is weak, so the nickel prices fluctuate and fall all the way.
Indonesia announces a new round of tax relief
President Jokowi of Indonesia issued government regulation No. 78 of 2019 on December 2. The latest regulation is about the preferential conditions of income tax for investment in specific industries or regions, including nickel ore business. The new regulation indicates that only enterprises meeting the conditions can enjoy the preferential policies. The conditions for accepting the preferential policies are subject to the value of assets invested by enterprises, including the amount of net income from tangible assets such as land Get a 30% tax cut, and share 5% of the tax cut every six years. Recently, the European Union complained to the WTO that Indonesia banned the export of nickel ore, which became the focus of the nickel market. Before that, a number of Indonesian officials still advocated to stop the export of nickel ore, and they need to continue to pay attention to the fermentation of the event. For example, if the European Union wins the lawsuit, Indonesia's resumption of nickel ore export may cause another huge market.
Indonesia's ban on mining is good for consumption
Due to the continuous disturbance of the ore end, the nickel price began to rise from July, ‘Indonesia's early implementation of the ban on mining policy’ has become more realistic, pushing the nickel price to a new high since September 2014. However, the policy of early ban on mining has been put into effect, and the nickel price has fallen from a high in September. At the beginning of November, the Indonesian government suspended the delivery of nickel ore due to the investigation of nickel miners who violated the export regulations, and seven nickel export companies were examined for suspected violation of regulations No. 11/2019 of the Ministry of energy and mineral resources. However, the review results show that Indonesia will resume normal export of nickel ore below 1.7% grade before 2020 (but the ban on nickel ore in 2020 will still take effect). This led to a loosening of the expectation of strict ore ban, further accelerating the decline of nickel price.
Stainless steel and lithium battery are two driving forces of nickel price demand
Public data shows that in 2019, China's primary nickel consumption is expected to reach 1.307 million tons, an increase of 11.3% year-on-year. In terms of consumption structure, the consumption of stainless steel primary nickel accounts for 84.7%, electroplating 4.6%, battery 4.6%, and stainless steel still dominates nickel consumption. It is expected that China's primary nickel consumption will reach 1.365 million tons in 2020, an increase of 4.5% year-on-year. From the perspective of global primary nickel consumption, stainless steel dominates nickel consumption and lithium battery nickel consumption grows fastest. It is estimated that by 2025, stainless steel accounts for 67% of nickel consumption and battery industry accounts for 17%; by 2030, stainless steel accounts for 63% and battery accounts for 22%.
Downstream stainless steel drags nickel price
According to the price monitoring of the business agency, as of December 4, the daily average price of 304/2B stainless steel plate 1.0*1219* 2438 (tolerance 0.91) was 1,368,3.33 RMB/t (including tax), which was 0.12% lower than the 13,700RMB/t (including tax) of the previous trading day. Stainless steel has fallen steadily since October. In the first three quarters of this year, the domestic stainless steel output remained high, and the steel factory warehouse and social inventory climbed to a historical high. Therefore, the pressure of removing stainless steel warehouse at the end of this year continues to affect the market. After entering November, the production reduction of domestic mainstream steel plants has been implemented in succession. The price of stainless steel has fallen, which is bad for the demand of primary nickel, which also has a certain drag on the price of nickel. December is the off-season of traditional consumption of stainless steel. After routine maintenance of steel enterprises, stainless steel may enter into the situation of supply and demand. At the beginning of the month, most of the steel mills in China continued to reduce the factory price.
New energy nickel demand hit
In October, the output of new energy vehicles in China was 85,000, down 34.76% year on year. The negative impact of the decline of new energy subsidies is gradually obvious. Since July, the growth rate of new energy vehicle production in China has changed from positive to negative. By 2020, subsidies in the field of new energy vehicles will be fully withdrawn, severely hitting the market's optimistic expectation of nickel demand in the field of new energy.
Bad news gathered, nickel prices fell continuously
To sum up, nickel analyst of the business association, believes that with the favorable consumption of Indonesia's ban on mining, the high nickel price has fallen, and the weak downstream demand, the high nickel price is difficult to support. In the near future, the market focuses on the EU's complaint against Indonesia's ban on mining at the WTO meeting. If the EU wins the lawsuit, that is, Indonesia will resume nickel mining in 2020 under the background of the local nickel iron construction progress being greatly advanced Therefore, in the future, nickel supply may be substantially excessive, which may cause a major blow to nickel prices. It is expected that nickel price will maintain a weak downward trend year ago, but after the Spring Festival, under the influence of the start-up of stainless steel plants, the ban on mining in Indonesia and the small amount of nickel ore shipments in the rainy season in the Philippines, nickel price may have a chance to rebound.
Relevant lwasted companies: Huayou Cobalt Industry(603799), Nanjing Hanrui Cobalt Co.,Ltd.(300618) and China Molybdenum Co.,Ltd.(603993).
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