Nickel Demand Surges as China Rebuilds Inventory Levels

Recording date: 2nd July 2024Nickel climbed back up to the $17,500 range. LME inventories are up about 5,000 tonnes (another China/Indonesia refinery had product certified last month) to 93 kt, while SHFE inventories dropped up 2,000 tonnes to 22.5 kt. LME inventories are at 2 years high - this was expected by me – we’re now up about 80kt across both exchanges since the market bottom – while that may sound ominous, please remember some analysts have 200+kt surpluses over the last 2 years. I believe that we had ~100kt last year and are running a small surplus heading to balance this year, so it would make sense that this amount of inventory would work its way onto inventories.More uncertainty over near-term expectations for EV sales combined with a renewed drop in lithium prices has slowed expected restocking. I still expect to see the overall nickel demand climb by 10% once we get through this uncertainty. INSG reported nickel demand YTD April up over 8% and a balanced market in April (~12kt surplus annualized)With EV/lithium seeing sulphate prices in China come off and back to a discount (where we expect), stainless prices are holding steady, and inventories in China have come off.Changes in another commodity will support stainless prices. We saw major incidents at 2 met coal mines in Australia and the US, which are pushing met coal prices higher. Metallurgical coal/coke is a significant cost component for NPI/stainless production in China and Indonesia.Per last session, after halt, *Western Mines Group* announced $1.5 million investment from Dundee Corp – Canadian merchant investor and have subsequently announced another good drill hole from Mulga Tank – first 600 metres continuously mineralized at 0.29% nickel with intervals of 0.3-0.4% nickel and had one 1 metre sample of 1.5% nickel. Canada Nickel announced a $US15 million bridge facility from Auramet, our long-standing financing partner. We’ve done 3 of these before, having bridged to financing/partners, including Anglo-American and Samsung/Agnico, in the past. We are targeting a bridge to completing the JV/equity financing required for Crawford.Magna Mining announced results from infill drilling in surface bulk sample area for low Cu-Ni, high PGM, which delivered results showing 5-20 g/t intervals.Premium Nickel continues to deliver drill results – 10 more holes to be utilized in their upcoming resource (which will come through in “coming weeks”) – saw core lengths and grades consistent with prior holes.lSPC Nickel announced drilling at the Muskox intrusion in Nunavut, Northern Canada. It is a remote location but a large intrusion that produced some splashy intersections in historical work done in the 1960s/1970s. We should see some interesting news flow through the fall.—Learn more: https://cruxinvestor.com/categories/commodities/nickelSign up for Crux Investor: https://cruxinvestor.com