Nickel: State of the market

Transcription

1 Nickel: State of the market November 217

2 HSEC Management Key toolkit SAFENICKEL Rolled out globally Focussed on: Fatal hazard protocols Life saving behaviours Catastrophic risk management Target ZERO HARM Zero fatalities 216 and 217 year to date. Total recordable injury frequency rate down -3% in the last 4 years to < 5. 2

3 Glencore Nickel Operations 3

4 Significant structural deficits We estimate a 17Kt nickel supply shortage for 217, as very strong demand offsets supply gains. Market tightness is evident in high and rising premiums and substantial stock draws from peak levels. Significant structural supply deficits, before the contribution of battery demand becomes material. Nickel market balance (Kt Ni) Balance Cumulative Balance F 218F Source: Glencore 4

5 Global nickel inventory (Kt Ni) Sizable decreases Global nickel inventory down from a peak of 9kmt to 65kmt today. 1 LME SHFE Kt - 74Kt - 66Kt China other (excl. SRB) Other (excl. SRB) Kt 38 Peak Current Source: Glencore, LME, SHFE 5

6 Gains in 3-series stainless drive nickel demand growth We see very strong growth in global nickel demand in stainless: Chinese stainless steel Growth driven firmly by 3-series output (+7%). Ramp up of Indonesian stainless capacity 2Mtpa 3-series capacity operational. Additional 1Mtpa to be commissioned H Ex-China/Indonesia 217 stainless growth at 4%. We estimate 217 primary Ni demand in stainless will increase by almost 9% to more than 1.5Mt. We forecast continued growth for 218 and beyond. World crude stainless output by grade (Mt) Primary nickel demand in stainless (Kt Ni) 5 3-series 2-series & duplex 4 series 1'6 Other World China Indonesia 4 1' Source: Glencore F 218F F 218F 6

7 Strong nickel demand across all regions and industries Positive developments in non-stainless further support solid demand growth: Oil & Gas We ve seen a steady return of demand, reflected in strongly improved offtake from special steel and nickel based alloy producers. Automotive A solid upswing in the European automotive market provides additional support to special steel. Batteries Strong growth in Korea, Taiwan and China with nickel consumption tracking +25% YoY. We estimate 217 global primary nickel demand increased by more than 9% to over 2.2Mt. Global primary nickel demand by industry (Kt Ni) 2'5 Stainless Special Steel Ni based alloys Plating Others Battery 2' 1'5 1' 5 Source: Glencore F 218F 7

8 Widespread underperformance in non-npi supply/npi supply up We estimate non-npi supply will decrease by 2% this year, reflecting price-induced closures, production issues and general supply disruptions. We nevertheless forecast global supply to grow by 5% in 217 to 2.6Mt. Increased ore availability enabled Chinese NPI production to rise to 39-4Kt Ni this year (361Kt Ni in 216). 217 Indonesian NPI production increased as PT SMI phase III commissioned and all phases ramped up. 217 production forecast at 178Kt Ni. Global non-npi supply (Kt Ni) Nickel pig iron supply (Kt Ni) 16 8 Chinese NPI Indonesian NPI F 218F F 218F Source: Glencore 8

9 Nickel market balance Global Supply (Kt) 1,985 1,964 2,59 2, % -1.1% 4.8% 4.6% Sulphide Laterite 1,181 1,179 1,37 1,453 Hydro-metallurgical Pyro-metallurgical ,43 1,192 China NPI Indonesia NPI Other FeNi/Matte Global Demand (Kt) 1,896 2,36 2,226 2, % 7.4% 9.3% 3.% Nickel market balance (Kt Ni) Supply Demand 2'3 2'2 2'1 2' China 1,13 1,125 1,21 1,226 Indonesia Europe US Japan Korea Taiwan India Other Global Balance / Surplus (Kt) Source: Glencore 1'9 1'8 1' F 218F 9

10 And all this with very limited primary nickel demand in batteries Short-term growth potential driven by substitution within the Li-ion battery segment to NMC/NCA cathodes, and within the NMC cathode segment towards higher Ni-content chemistries. Long-term growth potential reflecting the projected growth trajectory of EVs and ESS. Even the lower end of the range of forecast EV penetration generates considerable Ni unit demand from 225 onwards. We conservatively estimate more than 1M EVs will be sold a year in 225 and that will generate net additional primary nickel requirements of over 4Kt Ni in 225 only. World rechargeable battery production (GWh) 16 Li-Ion Ni-MH Ni-Cd F 218F Source: Glencore Primary nickel demand in batteries (Kt Ni) Ni-Cd Ni-MH (portable) 5 5 Ni-MH HEV Li-ion (portable) Li-ion (EV) Li-ion (e-buses) F 218F 22F 225F 1

11 In conclusion An exciting market outlook The nickel market s fundamentals are the best we ve seen since 26/27, as evidenced by stock draws, demand rates across all geographies and physical premia, which are at 1-year highs. Despite additional NPI production and lower forecast demand growth rates, sizeable structural deficits will exist into the future. Global stocks are drawing down very quickly despite headline LME inventory suggesting otherwise. Battery demand will very likely be a transformational demand event, which will turbo charge primary nickel demand in the next decade. Where will all the primary nickel needed come from? LME Nickel price (US$/t) 55' 45' 35' 25' 15' 5' Jan-7 Jan-8 Jan-9 Jan-1 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Source: Glencore, LME 11

12 Questions?

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