|By PR Newswire||
|April 8, 2014 10:38 AM EDT||
LONDON, April 8, 2014 /PRNewswire/ --
Prices of nickel breached US$16,500/t last Friday, exceeding the price level recorded 12 months previously. Strong performance of the nickel price is forecast to continue as a result of reduced supply of lateritic ore following the Indonesian ban on raw material exports. According to Roskill, while industry analysts, INSG meetings and Metal Bulletin conferences have predominantly focused on the impact of the ban on the stainless steel industry, non-stainless uses of nickel such as plating and nickel alloys may be more at risk of a market upheaval.
Production of nickel pig iron (NPI)
The direct effect of the nickel ban has been to cut off the Chinese NPI industry from its primary source of feedstock - the high-grade lateritic ore supplied by Indonesian mines. Roskill estimates that, in 2013, Chinese production of nickel pig iron was in the range of 460-500kt Ni. Around 80% of this is believed to have been produced in modern rotary kiln electric furnaces (RKEF), the preferred feedstock for which is ore with a minimum nickel content of 1.5%.
With nickel stocks estimated to have exceeded six to eight months of supply at the time of the ban's implementation and continued shipments of ore coming from the Philippines, NPI production in 2014 may be only slightly below 2013 levels. With further stockpiles of NPI held by producers and end users alike, growth in stainless steel output in China may slow down, but is unlikely to decline in the near term.
As for the prospects of NPI production in China beyond 2014, the main alternative source of lateritic ore is the Philippines. Its mine production has rivalled that of Indonesia in terms of nickel content and output is forecast to increase at a rate of 15-20%py. Although impressive by any standard, such growth would be insufficient to fully cover the gap left by Indonesia, even disregarding the lower grade of the ore mined in the Philippines.
Larger resources of lateritic ore are found in Australia, but at an average grade of only 0.75% Ni, while higher grade resources in New Caledonia are mostly captive to existing operations. The other two countries with sizeable resources are Cuba and Brazil, believed to contain over a billion tonnes of nickel resources each. But, even assuming that such countries would permit the export of large quantities of unprocessed ore, shipment of this material could add an estimated US$1,700/t to the production cost of NPI, rendering domestic beneficiation a more attractive proposition.
NPI produced in Indonesia is unlikely to fully replace Chinese production. As of November 2013, the Indonesian government had announced receipt of 89 proposals, of which 50 are believed to remain on the table, around 10-15 of which are believed to be in permitting stage, and around three of which have reportedly broken ground.
The possibility of relocating obsolete blast furnace or RKEF plants from China could reduce construction time, but several of the smelters are likely to require the construction of dedicated power plants, adding both capital expense and time needed for completion. Capital expenditure and energy costs are expected to increase for these operations, but are partially offset by lower transport costs, and even at a 10-20% cost increase, forecast increases in the nickel price are sufficient to render such operations economic.
Taking these factors into account, Roskill suggests that NPI production in Indonesia could reach 170-230ktpy Ni by 2018, alleviating but not fully filling the gap left by reduced ore exports.
Stainless steel producers facing strategic decisions
Despite the expected decline in NPI supply, Roskill points out that stainless steel mills have the luxury of being able to rely on a wide range of feedstocks. One alternative available to Chinese steel mills is to step up their reliance on metal scrap to complement their melting mix. As of 2013, China's external scrap ratio stood at 17%, compared to a world average of 45%. Prior to the Indonesian nickel ban, Roskill forecast the scrap ratio to increase to 21% by 2018, a figure that it says it will revise upwards in the wake of expected stronger demand for secondary sources of nickel following Indonesia's export ban.
A second alternative is the use of Class I nickel, in the form of nickel cathode, or briquettes, typically grading above 99.8% purity. Such material typically accounts for only 35% of total nickel consumption in stainless sectors, as the premium paid for the refining process renders this type of feedstock relatively costly compared to lower-grade materials such as NPI or ferro-nickel. But, with reduced availability of these latter materials, stainless steel mills may increasingly turn to higher-grade material - the type of material of which over 280kt of stocks remain in LME warehouses.
A third alternative is the substitution of nickel-bearing austenitic grades of stainless steel (300-series) by ferritic and martensitic grades (200 and 400-series). From 2003 to 2008, the share of austenitic grades fell from 70.6% to 56.5%, as a result of substitution following the high price of nickel. While the percentage of steels accounted for by austenitic grades has stabilised in recent years, any renewed surge in prices could provide a new push towards substitution - both within stainless steels, and between stainless steels and competing materials.
Non-stainless end users to feel the crunch
This abundance of choice in terms of feedstock is dramatically different in non-stainless industries. The largest of these sectors include plating (8.3% of total primary nickel consumption), superalloys and other nickel alloys (4.2% and 7.2% respectively), as well as other alloy steels and a variety of chemical applications - including batteries.
These sectors generally favour - or, indeed, are critically dependent on - high-grade material such as nickel powder, pellets, briquettes, and cathode. Intuitively, given the lack of their reliance on ferro-nickel or NPI, one might assume these sectors to be relatively insulated from the effects of the Indonesian nickel ban, but in fact the opposite may be true, says Thomas Höhne-Sparborth, Roskill's senior nickel analyst.
In the past, these sectors accounted for the minority share of nickel consumption, but for the majority of consumption of Class I nickel. In 2013, Roskill estimates non-stainless consumers of nickel accounted for 53% of consumption of high-grade nickel products. With stainless steel producers expected to turn to scrap and nickel cathode to offset decreased availability of NPI, purchasing managers looking for high-grade material may find themselves competing with a large contingent of Chinese stainless steel mills, on the market for alternative nickel feedstock, increasing the share of Class I consumption accounted for by the stainless sector and turning the market for Class I nickel into a "seller's market".
Uncertainty and volatility
Taking these dynamics into account, to 2018, under the assumption of the Indonesian ban on raw material exports remaining in place, Roskill forecasts nickel prices to increase to US$24,350/t. But, with uncertainty over smelter projects in Indonesia, the state of the NPI industry in China, the possibility of demand destruction through substitution, and the large but unknown share of stocks of nickel held by investors, increased volatility, speculation and price spikes appear likely.
For a more in-depth analysis of the nickel market, its sources of supply, its end use sectors, and Roskill's outlook to 2018, see the latest edition of Roskill's Nickel Market Outlook.
Roskill's new Nickel: Market Outlook to 2018 contains full estimates for 2013, profiles on major producers and projects, an assessment of key market and technological trends, a discussion of the Indonesian export ban, and an outlook for supply, demand and prices to 2018. This latest edition from Roskill Information Services Ltd, 54 Russell Road, London SW19 1QL ENGLAND can be order by Tel: +44-20-8417-0087, Fax +44-20-8417-1308, Email: [email protected] or Roskill's Website:http://www.roskill.com/nickel
Note to editors
Roskill Information Services Ltd. of London, UK is a leading provider of multi-client and bespoke market research services to the minerals and metals industry.
The new Nickel report contains 498 pages, 310 tables and 102 figures plus an appendix of international trade statistics. It provides a detailed review of the industry, with subsections on the activities of the leading producing companies. It also analyses consumption, trade and prices.
For further information on this report, please contact Patrick Stratton, [email protected] or +44-20-8417-0087.
SYS-CON Events announced today that MobiDev, a client-oriented software development company, will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place June 6-8, 2017, at the Javits Center in New York City, NY, and the 21st International Cloud Expo®, which will take place October 31-November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. MobiDev is a software company that develops and delivers turn-key mobile apps, websites, web services, and complex softw...
Mar. 30, 2017 02:15 AM EDT Reads: 4,094
DevOps is often described as a combination of technology and culture. Without both, DevOps isn't complete. However, applying the culture to outdated technology is a recipe for disaster; as response times grow and connections between teams are delayed by technology, the culture will die. A Nutanix Enterprise Cloud has many benefits that provide the needed base for a true DevOps paradigm.
Mar. 30, 2017 01:30 AM EDT Reads: 2,617
What sort of WebRTC based applications can we expect to see over the next year and beyond? One way to predict development trends is to see what sorts of applications startups are building. In his session at @ThingsExpo, Arin Sime, founder of WebRTC.ventures, will discuss the current and likely future trends in WebRTC application development based on real requests for custom applications from real customers, as well as other public sources of information,
Mar. 30, 2017 01:15 AM EDT Reads: 1,217
DevOps tends to focus on the relationship between Dev and Ops, putting an emphasis on the ops and application infrastructure. But that’s changing with microservices architectures. In her session at DevOps Summit, Lori MacVittie, Evangelist for F5 Networks, will focus on how microservices are changing the underlying architectures needed to scale, secure and deliver applications based on highly distributed (micro) services and why that means an expansion into “the network” for DevOps.
Mar. 30, 2017 01:00 AM EDT Reads: 8,307
In his session at Cloud Expo, Alan Winters, an entertainment executive/TV producer turned serial entrepreneur, will present a success story of an entrepreneur who has both suffered through and benefited from offshore development across multiple businesses: The smart choice, or how to select the right offshore development partner Warning signs, or how to minimize chances of making the wrong choice Collaboration, or how to establish the most effective work processes Budget control, or how to max...
Mar. 30, 2017 12:45 AM EDT Reads: 664
Interoute has announced the integration of its Global Cloud Infrastructure platform with Rancher Labs’ container management platform, Rancher. This approach enables enterprises to accelerate their digital transformation and infrastructure investments. Matthew Finnie, Interoute CTO commented “Enterprises developing and building apps in the cloud and those on a path to Digital Transformation need Digital ICT Infrastructure that allows them to build, test and deploy faster than ever before. The int...
Mar. 30, 2017 12:30 AM EDT Reads: 1,526
China Unicom exhibit at the 19th International Cloud Expo, which took place at the Santa Clara Convention Center in Santa Clara, CA, in November 2016. China United Network Communications Group Co. Ltd ("China Unicom") was officially established in 2009 on the basis of the merger of former China Netcom and former China Unicom. China Unicom mainly operates a full range of telecommunications services including mobile broadband (GSM, WCDMA, LTE FDD, TD-LTE), fixed-line broadband, ICT, data communica...
Mar. 30, 2017 12:15 AM EDT Reads: 3,573
ChatOps is an emerging topic that has led to the wide availability of integrations between group chat and various other tools/platforms. Currently, HipChat is an extremely powerful collaboration platform due to the various ChatOps integrations that are available. However, DevOps automation can involve orchestration and complex workflows. In his session at @DevOpsSummit at 20th Cloud Expo, Himanshu Chhetri, CTO at Addteq, will cover practical examples and use cases such as self-provisioning infra...
Mar. 29, 2017 11:45 PM EDT Reads: 3,243
SYS-CON Events announced today that Ocean9will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Ocean9 provides cloud services for Backup, Disaster Recovery (DRaaS) and instant Innovation, and redefines enterprise infrastructure with its cloud native subscription offerings for mission critical SAP workloads.
Mar. 29, 2017 09:30 PM EDT Reads: 2,459
MongoDB Atlas leverages VPC peering for AWS, a service that allows multiple VPC networks to interact. This includes VPCs that belong to other AWS account holders. By performing cross account VPC peering, users ensure networks that host and communicate their data are secure. In his session at 20th Cloud Expo, Jay Gordon, a Developer Advocate at MongoDB, will explain how to properly architect your VPC using existing AWS tools and then peer with your MongoDB Atlas cluster. He'll discuss the secur...
Mar. 29, 2017 07:30 PM EDT Reads: 923
Things are changing so quickly in IoT that it would take a wizard to predict which ecosystem will gain the most traction. In order for IoT to reach its potential, smart devices must be able to work together. Today, there are a slew of interoperability standards being promoted by big names to make this happen: HomeKit, Brillo and Alljoyn. In his session at @ThingsExpo, Adam Justice, vice president and general manager of Grid Connect, will review what happens when smart devices don’t work togethe...
Mar. 29, 2017 06:30 PM EDT Reads: 2,764
Building a cross-cloud operational model can be a daunting task. Per-cloud silos are not the answer, but neither is a fully generic abstraction plane that strips out capabilities unique to a particular provider. In his session at 20th Cloud Expo, Chris Wolf, VP & Chief Technology Officer, Global Field & Industry at VMware, will discuss how successful organizations approach cloud operations and management, with insights into where operations should be centralized and when it’s best to decentraliz...
Mar. 29, 2017 05:15 PM EDT Reads: 3,837
SYS-CON Events announced today that Juniper Networks (NYSE: JNPR), an industry leader in automated, scalable and secure networks, will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Juniper Networks challenges the status quo with products, solutions and services that transform the economics of networking. The company co-innovates with customers and partners to deliver automated, scalable and secure network...
Mar. 29, 2017 04:30 PM EDT Reads: 1,711
Deep learning has been very successful in social sciences and specially areas where there is a lot of data. Trading is another field that can be viewed as social science with a lot of data. With the advent of Deep Learning and Big Data technologies for efficient computation, we are finally able to use the same methods in investment management as we would in face recognition or in making chat-bots. In his session at 20th Cloud Expo, Gaurav Chakravorty, co-founder and Head of Strategy Development ...
Mar. 29, 2017 04:15 PM EDT Reads: 3,920
DevOps is often described as a combination of technology and culture. Without both, DevOps isn't complete. However, applying the culture to outdated technology is a recipe for disaster; as response times grow and connections between teams are delayed by technology, the culture will die. A Nutanix Enterprise Cloud has many benefits that provide the needed base for a true DevOps paradigm. In his Day 3 Keynote at 20th Cloud Expo, Chris Brown, a Solutions Marketing Manager at Nutanix, will explore t...
Mar. 29, 2017 04:00 PM EDT Reads: 3,249