Nickel market overview

Transcription

1 Nickel market overview INSG Meeting, October 21 Khayyam Jahangir Manager Steel Alloys Research Information Services Ltd. Disclaimer The statements in this presentation represent the considered views of Information Services Ltd. It includes certain statements that may be deemed "forward-looking statements." All statements in this presentation, other than statements of historical facts, that address future market developments, government actions and events, are forward-looking statements. Although Information Services Ltd. believes the outcomes expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in forward-looking statements. Factors that could cause actual results to differ materially from those in forward-looking statements include changes in mining costs, the LME nickel price and general economic, market or business conditions. While Information Services Ltd has made every reasonable effort to ensure the veracity of the information presented it cannot expressly guarantee the accuracy and reliability of the estimates, forecasts and conclusions contained herein. Accordingly, the statements in the presentation should be used for general guidance only. 2

2 Outline Demand Review of primary nickel consumption Trends in stainless steel production Nickel consumption in batteries Supply Review of primary nickel production Future supply trends Market outlook Forecast stainless steel production Future nickel production Nickel consumption

3 World: Primary nickel consumption, ,4 1 5 % 1,2 1 2 % 1, 9 % (t) % 3 % 4 % 2-3 % f -6 % China Japan Other As ia Europe USA Other Year-on-year change (RHS) Source:, INSG After downturn in late 28/early 29, primary consumption has improved in 21 W orld: Primary nickel consumption, % 3% 2% 1% % -1% -2% -3% Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q Q-O-Q Y-O-Y Source: INSG

4 Production has followed a 2-3 year cycle over recent years W orld: C rude stainless steel production, , 2% 3, 15% (t) 25, 2, 15, 1, 5, 1% 5% % -5% f -1% Crude s tainles s s teel production Year-on-year change (RHS) Source: : Nickel Market Outlook to 214 Use in industrial applications means stainless production is closely correlated to GDP W orld: S tainless steel production and GD P, year-on-year change 2% 5% 15% 4% Stainless production 1% 5% % 3% 2% 1% World GDP -5% % -1% f -1% Crude stainless steel production W orld GDP Source: : Nickel Market Outlook to 214

5 Stainless steel production began improving from Q2 29 lifting the nickel market World: Quarterly stainless steel production % 5% 4% 3% 2% 1% % -1% -2% -3% -4% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q Q-O-Q Y-O-Y Source: ISSF We cannot talk about the stainless steel market without focusing on China W orld: C rude stainless steel produ ction, , 25, 2, (t) 15, 1, 5, f Asia (Ex. China) China Europe North Am erica Others Source:

6 Chinese consumption growing exponentially, compared to decline in the rest of world Stainless steel consumption index, China W orld Ex. China Source:, WBMS Note: 2 = 1 China: Stainless steel consumption per capita GDP, Consumpt ion per capita (kg) , 1, 5 2, 2, 5 3, 3, 5 G D P p e r c a p i t a ( U S $ ) Source:, WBMS, IMF

7 How much further will Chinese stainless steel consumption grow? S t a i n l e s s s t e e l c o n s u m p t i o n p e r c a p i t a V S G D P p e r c a p i t a, Stainless steel consumption per capita (Kg) I t a l y G e r m a n y E u r o A r e a J a p a n U S A C h i n a I n d i a 1, 2, 3, 4, 5, G D P p e r c a p i t a ( U S $ ) Source:, WBMS, IMF Growth of 7-9%py could see China consume 25Mt by 225 Potential C hinese stainless steel consumption 16 Stainless steel consumption per capita (kg) Source:

8 Nickel in batteries Approximately 36,t of nickel was consumed in batteries in 29 World: Nickel consumption in batteries, 29 HEV's 3% Industrial 5% Portable batteries 65% Source:, INSG

9 Nickel is used in various different battery types Nickel cadmium Comparison of nickel batteries Energy Wh/kg 5 Power W/kg 6 Cost US cents/wh 3-5 Nickel-metal hydride Nickel zinc Nickel iron Sodium nickel chloride Source: INSG Nickel-metal hydride largest consumer of nickel in batteries World: Nickel consumption in batteries by consumer application, 27 Battery Ni content (%) Ni content (t) Single cells NiMH 3 3,78 Consumer (hand-held) NiMH 3 3,3 Games NiMH Audio NiMH 3 45 Cordless home phone NiMH 3 1,152 Power tools Nicd 2 7,2 HEV s NiMH 3 12, Industrial batteries Nicd 15 1,5 Source: Takeshita ITT Report 27

10 Environmental concerns and high oil prices could see a surge in demand for HEV s Potential nickel consumption in H EV's 9, 8, 7, Nickel consumption (t) 6, 5, 4, 3, 2, 1, Source: Primary nickel supply

11 Production has increased faster than consumption World: Primary nickel supply, 2-21 (t) 1,6 1,4 1,2 1, Index f Europe Asia Ex. China China Canada Russia Australia Others Consumption Index (RHS) Production index (RHS) 1 Source: INSG Note: Index 1999=1 Leading nickel producers have had inconsistent production patterns Leading producers nickel prod uction, year-on-year change 4% 3% 2% 1% % -1% -2% -3% -4% MMC Norilsk Nickel Jinchuan Group BHPB Vale Xstrata Source:

12 Recent years have seen production balanced between ore type World: Nickel production by ore type, 28 Laterite 43% Sulphide 57% Source: : Nickel Market Outlook to 214 Over.7Mt of new capacity has been announced, of which two-thirds will be laterite W orld: Announced future nickel capacity by ore, % 9% 8% 7% 6% 5% 4% 3% 2% 1% % Laterite S ulphide Source: : Nickel Market Outlook to 214

13 Current laterite operations are more expensive than sulphide Industry cash operating cost, 21 1,2 1, Operating cost US cent/lb , 1,2 1,4 Cum ulative nickel production (t) Source: : Nickel Market Outlook to 214 Nickel market outlook

14 Future demand for nickel to be underpinned by rising stainless steel production World: Crude stainless steel production forecast 5, 12% 4, 1% (t) 3, 2, 1, 8% 6% 4% Year-on-year change Asia (Ex. China) China Europe North America Others Total crude stainless steel production (RHS) Nickel consumption (RHS) 2% Source: With lots of potential future capacity coming online, supply looks secure World: Proposed future nickel capacity, (t) 25, 7% (t) 2, 15, 1, 5, 6% 5% 4% 3% 2% 1% Year-on-year change % Announced future nickel supply Forecast primary nickel supply (RHS) Source:

15 Conclusions Stainless steel production likely to keep increasing in the coming years No reason for Chinese demand for stainless steel and nickel to slowdown in the next 3-5 years Batteries could provide a new and growing end-use for nickel New laterite capacity could be costly to bring online A large quantity of new nickel supply has been announced, will it all enter the market? Steel Alloys Minor Metals Industrial Minerals New reports for 21: Vanadium (Q3) Iron ore (Q4) Contact: Khayyam Jahangir Manager Steel Alloys Research khayyam@roskill.co.uk 28