China Announces 1 Trillion RMB Package to Re-Ignite Market

Recording date: 25th OctoberNickel prices bouncing off $18,000 ($8.20) again for the balance of the week. Still expect further move lower down to $17,500 level – have seen a steady increase in LME inventories (still at a low level of 45,000) up about 1-2,000 per week“Great convergence” – sulphate premium to briquette hanging in, NPI prices hanging it similar levels even with ore prices edging down slightly. Heading into a period where the Philippine's rainy season disrupts shipments and according to sources still seeing ore heading to Indonesia so interesting to see what will happen over the next few months as people stock up in advanceBig News out of China:Big news overnight was Chinese stimulus which appears multiple measures to halt a slowdown in the economy.  Policy support has returned to the Chinese economy, with a plan approved to raise the fiscal deficit to 3.8% of GDP, well above the 3% target set earlier in the year. Furthermore, over and above this deficit the NPC has approved issuance of RMB1trn in long-term construction bonds, with half the funds to be spent in Q4 and half in 2024. PRC Macro note that proceeds from this issuance will be only used for infrastructure investment, mostly for hydropower and flood prevention. These funds cannot be used for building new production capacity. Meanwhile, the National Finance Conference has been confirmed to take place early next week (following President Xi’s first direct visit to the PBoC in his tenure), which will focus on containing financial risks and potentially the establishment of a permanent state equity stabilisation fund, suggesting supporting asset prices has become a policy mandate for the PBoCAdamas Intelligence:They look at MW of batteries installed. Remember LFP share by car is increasing but is smaller batteries on average.  High nickel batteries tend to be in bigger batteries.  In July 2023, Adamas Intelligence data shows that LFP share by MW was only up 1% to 31% and that the average passenger battery electric vehicle (BEV) sold globally contained 25.3 kilograms of nickel, up 8% year-over-year, while the average PHEV contained 6.5 kilograms, up 11% year-over-year. Multiply that by times increase in the number of cars sold.Sharp LME price move lower driven by funds have amassed $4.6 billion in short positions against London Metal Exchange nickel contracts, helping to create a net short position valued at $2 billion, according to data from the bourse. Measured by value, that’s a record in data going back to 2018, while in tonnage terms the mismatch is near an all-time high seen in 2019.   We’ll see a move lower and also set the stage for a rebound at the end of the year (as will need to cover those shorts at some point) – given scale of the shorts is surprising nickel price not already lower !!Company News:Talon Metals raised $22 million to continue exploring Tamrack – a very tough market out there and good to see $ being raised.SPC Nickel (talked about last week) – additional results from shallow infill holes WG-23-063: 1.01% Ni, 0.53% Cu over 17.00 metres (12.00 to 29.00 metres) within a wider zone grading 0.71% Ni, 0.38% Cu over 59.00 metres (2.00-59.00 metres).Alaska Energy – first time talking about - prospect explored in 1990s by Inco.  First drilling is tapping similar historic grades over wide widths; highlights include:• 341.6 meters averaging 0.23% nickel, 0.08% copper, 0.02% cobalt, 0.107 g/t palladium, 0.051 g/t platinum, and 0.011 g/t gold in hole EZ-23-001.• 296.6 meters averaging 0.23% nickel, 0.09% copper, 0.02% cobalt, 0.115 g/t palladium, 0.052 g/t platinum, and 0.013 g/t gold in hole EZ-23-002.Alaska is one of only a handful of locations where one can find nickel in the USA.—Learn more: https://cruxinvestor.com/commodities/nickelSign up for Crux Investor: https://cruxinvestor.com