Nickel outlook within the context of battery electric vehicles

Nickel prices corrected sharply following Tsingshan’s announcement of an agreement to provide nickel matte to two producers . Derived from low-grade nickel pig iron (NPI), Matte can be further processed in to nickel sulphate , which is used in the manufacturing of L i-ion batteries. Prior to that announcement , nickel prices had been rallying on the back of ambitious green targets in Europe, the Biden infrastructure plan (along with emission targets) and investors (along with speculators) looking to invest in green energy transition metals. Most importantly, it was the perception that miners will not be able to meet the rising demand of Battery Electric Vehicles (BEVs) which also helped to propel prices to a 7-year high . The current NPI-Nickel sulphate spread does incentivise a vertically integrated nickel producer to convert NPI into matte and finally into n ickel sulphate. Nevertheless, if one cannot achieve full integration then profit margins support simply selling NPI, rather matte. I t is probably too early to say that Tsingshan has fundamentally changed the nickel market and provided a solution to meet f uture nickel sulphate demand . I t is uncertain whether Tsingshan ’s announced matte sale s will be repeat orders and key questions remain regarding costs, the volume that can be produced and finally, the environmental impact. With that in mind, our view is that nickel prices are still on an upwards trajectory in the coming years. Stronger than expected BEV sales and growing emissions targets in the US and Europe all provide a strong case for higher prices .