Ramu sends the nickel price to 5 annual high in the midst of the narrowest market in ten years.
London Metal Exchange - LME
Expectations of a booming demand for electric vehicles have compounded the longer-term nickel bull fall, and a supply crisis, threatening to shut down a large Asian supplier, only fueled Friday's fire.
Nickel has risen by 65% since the beginning of the year and gained more than 8% to $ 17.695 per ton in London on Friday, its highest level since 2014 since September. As an indicator of how tight the supply has become, in London the spread between spot prices for nickel and delivery in three months rose to its highest level in a decade.
The price of nickel rose to a record high of 18.342 $ / ton in Shanghai, outperforming the value of tin on this derivatives market for the first time.
Friday's move follows after the Papua New Guinea Ministry of Mines has announced it will close a nickel processing facility at Metallurgical Corp of China (MCC), which has dumped mine waste into Basamuk Bay, Papua New Guinea.
"The facility (Ramu) produces about 35.000 tons of nickel, which is 23% of the metal stored in the London Metal Exchange's inventory," said antipodean investment bank ANZ in a note quoted by Reuters.
The prize received another boost on Friday after the Indonesian Mining Minister said the country would speed up the reintroduction of a ban on unprocessed ore exports, which was first announced for 2022.
China's nickel-pig iron production (NPI), which is fed by Indonesian and Philippine mines, dominates global industry, and despite the economic slowdown in China, which imports around 50% of the world's nickel, stainless steel production is growing rapidly.
Bloomberg also reported on Friday that the US-based Carlyle Group was involved in a year-long process to unravel a costly nickel warehouse fraud in Hong Kong worth about 300 million dollars, deceiving the big metal brokers.
Miners made of devilish copper are used to suffering wild price fluctuations. From the lows of mid 2017 below 9.000 $ / t until about that time last year, metal gained around 79% before plummeting by almost a third on its opening levels of 2019. And one can not forget that in March 2007 reached its highest level of 51.780 nickel per tonne.
Shake by Jakarta
When Jakarta imposed a ban on promoting the construction of domestic smelters from 2014 to 2016, the price initially rose, but Chinese NPI producers were able to switch to Philippine miners in a relatively short time, so it is unclear what effects export restrictions will have this time would.
NPI contains only 8-12% nickel, and less than half of the total nickel production is a Class 1 product, which is suitable for converting to nickel sulfate for battery production.
Nickel powder class 1 for the production of sulphates enjoys a high premium price increase compared to the LME prices, but for miners, who want to change to battery suitable material, enormous investments in the development of refining and processing plants are necessary.
But confidence in future demand is so great that BHP decided last year to give it up after many attempts to keep it, and now spends hundreds of millions of dollars to convert its Australian operations to battery-grade production.
The history of electric vehicle (EV) is exciting for the metal, but it is still in its infancy. Last year, only about 6% of nickel landed in EV batteries as 70% of the supply goes into stainless steel production.
Mining.com / ISE
