Balmoral Resources Ltd BALMF

Nickel Tidbits - Short Post

[Chaulkdust]

"ONE MARKET OR MULTIPLE MARKETS?
Future demand for nickel sulfate is only going to accentuate the existing structural tensions between different types and chemistries of nickel.
That’s the nature of the stuff. It comes in so many different varieties that the tradeable commodity is constantly shape-shifting.
Take the London Metal Exchange (LME) contract, for example.
Although the exchange’s physical delivery criteria are uniform in terms of minimum purity and impurity levels, they allow for a wide variety of shapes, ranging from pellet to briquettes to cut cathode.
The LME’s decision to delist two Russian brands of full-plate nickel, for the quite understandable reason that Nornickel no longer produces them, has changed the essence of the contract.
Russian full-plate, which used to account for just about all LME stocks, has been shipped to China, where it is still deliverable against the Shanghai Futures Exchange (ShFE).
Full-plate nickel currently accounts for less than 20 percent of total registered stocks. The share of stocks in bagged briquettes, by contrast, has risen from zero at the start of 2012 to 79 percent.
The coming electric vehicle revolution opens up a whole new schism between nickel in metallic form and in chemical form.
Premiums for chemical nickel are already diverging as battery makers have to pull extra units from the stainless or super-alloy process streams.
The obvious outcome is for the nickel market to split into two distinct entities, and the LME has already indicated it is considering launching a new contract for nickel sulfate. The exchange is also, by the way, studying a cobalt sulfate contract for exactly the same reason.
Because right now the “nickel market” is still in lock step with its traditional stainless steel demand base. That base is actively working against the efficient evolution of a separate supply chain stream to feed battery demand.
The tensions are growing all the time.
The EV story is a strong, slow-burn bull case for higher nickel prices.
Nickel sulfate prices, not nickel pig iron prices.
Editing by David Goodman"

China announced a reduction in import taxes for Nickel Sulfide (Class 1 Nickel) from 5.5% to 2% and may even go as low a 1% in the future. Getting ready for the EV battery boom.

LME is supposed to announce what they plan to do with a 2 tier Nickel pricing structure in 2019.