Indonesian Mining Industry: The export of nickel ore will be stopped from January 1, 2020

1. Nickel Spot Trend

On September 2, nickel prices soared again. According to the monitoring of nickel prices of business associations, the spot price of nickel on September 2 was 141366.67 yuan/ton, which surged 9.05% from 129633.33 yuan/ton on the previous trading day; the opening price of Shanghai nickel rose nearly 6% to 136960 yuan/ton, a new high since the re-listing of nickel; and the three-month period of LME nickel rose sharply, once reaching 8.14%, the biggest increase in 10 years.

2. Historical Trend of Spot Nickel

According to the data of business associations, nickel rose by nearly 10% in a single day today, with a price of 1413,366.67 yuan per ton, breaking a new high of 130,000 yuan, surging 57% from the beginning of the year, hitting a five-year high since September 2014. The ban on mining in Indonesia in 2014 caused nickel prices to rise by nearly 50% in the six months at that time.

Nickel Price Rising in Indonesia’s Mining Boots

Bambang Gatot Ariyono, head of coal and minerals at Indonesia’s Ministry of Mining, said Monday that Indonesia would stop exporting nickel ore from January 1, 2020 because Indonesia had to process more mineral resources at home. Ariyono told reporters that the implementation of this regulation was two years ahead of the original plan and only applied to nickel ores. After the news spread, spot nickel soared by nearly 10%, and futures nickel closed directly.

3. Indonesia’s nickel imports account for more than 1/3 of the total

China expects to import about 70.6 million tons of nickel ore in 2019, of which 26 million tons are from Indonesia, accounting for 36.8% of the total, accounting for more than one third. If Indonesian nickel mines stop exporting nickel ores on January 1, 2020, the supply of nickel ores will be affected by more than one third.

The largest nickel mine in the Philippines will stop mining in October when nickel resources are depleted

Due to the depletion of resources, LANGUYAN, the highest-grade nickel mine in the Philippines, will stop mining in October. At present, the delivery capacity of the mine is about 600,000 mt/month, with an average nickel grade of more than 1.5%. In addition, another mine near the mine, ANC, is also facing the pressure of exhaustion of resources. Although it has not been officially closed down, there are no high-grade minerals, mainly middle-grade tailings. Because of the earlier development time, the exhaustion pressure of high-grade ore in Tawi Ta mining area is indeed higher. The annual shipment capacity of LANGUYAN nickel mine is 7.2 million tons per year, accounting for 16.74% of the total import volume of the Philippines, which is 41.87 million tons per year.

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4. Downstream Stainless Steel Follows Up by a Big margin

 

As of September 2, the daily average price of 304/2B stainless steel plate 1.0*1219*2438 (tolerance 0.91) was 14171.43 yuan/ton (including tax), up 2.48% from 13828.57 yuan/ton (including tax) of the previous trading day, up 8.65% from the lowest level since June 19 this year. Stainless steel production continued to increase in August, which supported nickel prices.

Nickel Price Rising High Nickel Ternary Lithium Batteries Still Have Advantages

With the prohibition of nickel ore export and the rise of nickel price, the price rise of nickel-related products and derivatives will eventually affect the development of the industrial chain. Increasing nickel price will drive up the price of nickel sulfate. Recently, the price of cobalt sulfate has been rising all the way, from 27500 yuan/ton on August 29 to 28400 yuan/ton. As one of the raw materials of high nickel lithium-ion batteries, nickel sulfate increases the proportion of nickel in the batteries and reduces the proportion of cobalt, so as to achieve the goal of long-term service. At present, the ternary cost growth after nickel price conversion is still acceptable to the downstream manufacturers, and the trend of high nickelization is also very clear. As a new demand for nickel, it is still strong.

Two factors may weaken the strong momentum of nickel prices

With Indonesia’s ban on nickel exports, nickel prices may exceed expectations in the fourth quarter, but there are two factors that may weaken the strong momentum of nickel prices: first, China has stockpiled a large amount of nickel, and second, the Philippines may increase exports as Indonesia stops selling.

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The effect of ore ban on domestic stainless steel raw materials is relatively limited.

For the domestic stainless steel industry chain, the relative tightness of raw materials is phased. With the release of Indonesia’s new production capacity of ferronickel, the export of ferronickel will replace the export of nickel ore. This effect will be evident in the second half of next year. In the medium and long term, the impact of ban on domestic stainless steel raw materials is relatively limited.

Indonesian mining boots landing bullish mood or ease

To sum up, Liu Meimei, nickel analyst of the business association, believes that the news of Indonesia’s ban on mining had a wave of hype as early as early as July, which caused the price of nickel to soar by nearly 40% this year. Until recently, the news of Indonesia’s ban on mining hit hard, and the price of nickel soared by nearly 20%. But with the boots landing, the hype may ease. Recalling the historical data of nickel price, it was also banned in Indonesia in 2014. China imported more than 1/3 of Indonesian nickel ore in the whole year. At that time, the price of nickel soared to 150,000/ton. According to this level, there is still room for nearly 10,000 nickel prices to rise. However, the ban on nickel mining in Indonesia does not exclude the possibility that the Philippines may increase its nickel export volume and to some extent reduce the impact of Indonesia’s ban on nickel mining. Overall, the Philippines is facing the depletion of nickel resources. The largest nickel mine will be closed in October, while September and October will be the traditional peak season. Although macro-uncertainties may reduce demand, overall, the supply of nickel price is tight in the medium and long term, but it is still optimistic. Now the nickel price is hot, there is room to increase by 150,000 yuan, then or higher. The next wave of high points or the closing time of nickel mines in the Philippines in October.

POLYVINYL ALCOHOL