Canada Nickel Company Inc V.CNC

Morgan Stanley on Nickel...

[CravingProfits]

Nickel has likely troughed”

• Most of the surplus modelled for 2024 has been wiped out by production cuts in Australia and New Caledonia; Approximately 110kt has been removed from system and around another 120kt is “at risk”

• As much as one-third of Australia’s forecast nickel production in 2024 has been curtailed, but the Australian government’s 50% royalty rebate “

  may provide some relief to miners, potentially slowing the rate of shutdowns from here unless nickel prices fall further”

 

Summarising the supply. Source: Morgan Stanley Research estimates

• “Nickel short positioning had got very stretched”, and there is currently a degree of short covering occurring; Net short positioning which peaked in Feb at “over 24,000 lots” has dipped to “just ~10,000 lots”

 

Nickel short positioning had got very stretched. Source: Bloomberg, Morgan Stanley Research

• On the demand-side, “nickel containing batteries continued to lose share to LFPs (lithium-iron phosphate)” but a recent rise in nickel sulphate prices suggests “a restock from cathode producers”

• Given above factors, the nickel market in 2024 is likely to be “closer to balanced”, but “the trajectory could still be volatile from here”