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Nickel Outlook 2022: Balanced Market Ahead, Prices to Remain Strong

Click here to read the previous nickel outlook.Nickel’s price performance surpassed expectations in 2021, rallying above US$20,000 per tonne as demand showed signs of recovery. The base metal’s main demand drive will continue to be stainless steel…

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Click here to read the previous nickel outlook.

Nickel’s price performance surpassed expectations in 2021, rallying above US$20,000 per tonne as demand showed signs of recovery.

The base metal’s main demand drive will continue to be stainless steel for some time, but interest in nickel’s use in electric vehicle batteries continues to pick up pace.

As the year comes to a close, the Investing News Network (INN) asked analysts in the field for their thoughts on what’s ahead for the base metal. Read on to find out what they had to say.

Nickel outlook 2022: Price performance review


Volatility reigned in the nickel market in 2022, but it is difficult to deny the metal had an outstanding year. Prices increased more than 16 percent throughout the year, breaking the US$20,000 per tonne mark and hitting a more than seven year-high.

“The biggest surprise was the price performance of nickel,” Marta Dec of CRU Group told INN.

“We were not expecting a big price drop for 2021, but I don't think anyone anticipated just quite how high the price was going to go,” she added.



Kicking off 2021 on an already bright note after a 2020 that saw prices fall sharply, nickel opened the year at US$17,344. The coronavirus pandemic hurt the base metal as many other markets, but speculation around demand for nickel in electric vehicle batteries helped prices rebound in 2020.

The reopening of economies after COVID-19 strict restrictions supported prices in the first quarter of 2021. In Q2, following news from top producer Tsingshan that eased concerns over a supply shortage, prices experienced a steep decline.

But before the second quarter finished, nickel bounced back, performing in a choppy fashion but increasing to end the year trading above US$20,000.

Sharing his thoughts with INN, Andrew Mitchell, head of nickel research at Wood Mackenzie, said that, broadly speaking, the nickel market performed as expected. The firm started the year with a 2021 price forecast of US$19,400, with prices now likely to average around US$18,500 for the year.

Nickel outlook 2022: Demand and supply dynamics


Looking back at how analysts had predicted the market dynamics to develop in 2021, many were looking at a strong demand recovery. However, Mitchell said both demand and supply have been stronger than expected at the start of the year.

“The increase in production in Indonesia has been nothing short of astounding, but also the rebound from the COVID hit in 2020 in terms of demand has also been much stronger than expected,” Mitchell said.

At the end of 2020, CRU was expecting a balanced market, however in 2021 nickel is looking to end up in a deficit.

“I think that's definitely something we didn't entirely expect back in 2020,” Dec said. “Perhaps we underestimated the recovery of the demand, as well as we didn't expect some ex-NPI (nickel pig iron) underperformance this year.”

In fact, major producers Nornickel (MCX:GMKN) and Vale (NYSE:VALE) have reported lower nickel output this year. The Russian nickel and palladium miner saw disruptions of its Oktyabrsky and Taimyrsky underground mines and concentrator.

Meanwhile, Brazil’s Vale’s production of finished nickel was hit mainly due to the labour disruption at Sudbury, with the company also lowering its guidance for 2022 on the back of disruptions and license issues at Onca Puma.

As 2022 kicks off, all eyes will continue to be in the top nickel producing countries — Indonesia and the Philippines. In 2020, Indonesia produced 760,000 metric tonnes of nickel while the Philippine's output hit 320,000 metric tonnes, according to the US Geological Survey.

Commenting on the challenges miners in these top producing countries face going forward, Mitchell said essentially local legislation related to both environmental social and governance issues as well as limiting the export of semi-finished materials.

“Indonesia has been talking about banning exports of nickel products containing less than 70 percent nickel and the Philippines has recently relaunched a bill to possibly phase out ore exports in the same manner as Indonesia did to encourage domestic processing,” he said. “Either of these could have a significant impact on nickel supply.”

Another key factor to watch out for in these countries is the heavy rain months, which can cause disruptions to supply.

“We do see quite often lower production rates during the heavy rain months,” Dec said. “It’s the period of the year that is normally prone to lower production.”

Looking ahead, Mitchell pointed out the need for new supply to come online into the market.

“But even at current elevated nickel prices we are not seeing any rush in lending to develop new nickel projects,” he said, adding that funding will remain a significant challenge for junior miners as we enter 2022.

When asked about which regions she is keeping an eye out for, CRU’s Dec said projects in Brazil and the Americas, mentioning Sibanye-Stillwater’s (NYSE:SBSW) investment in the Santa Rita nickel mine in Brazil as an interesting development for the space.

“I think the financing of such operations in that region is definitely the biggest challenge for juniors,” she said. “So somebody with the size of Sibanye’s wallet could definitely make them happen.”

Another region which CRU is paying attention to is Australia, in particular the Sunrise operations. The project is a high pressure acid leach operation that is set to produce nickel sulfate on site — the material required for a battery precursor.

“It sounds like a great solution to not have to send out material for further processing elsewhere, but to keep the value chain in one place,” Dec said.

Looking over to demand side of the story, the battery segment has received a lot of attention in the past year due to nickel's use in cathodes for electric vehicles.

However, not all cathodes use nickel. In fact, in the past year there has been a resurgence of interest and use of lithium-iron-phosphate (LFP) cathodes mainly in China, which has brought some concerns for nickel and cobalt investors.

“The resurgence of LFP is predominantly a China story for the present, but elsewhere, ternary batteries remain favoured,” Mitchell said. “In the near term in China, LFP will potentially reduce nickel demand, but longer term there is still a growth story.”

Wood Mackenzie expects LFP to continue to take about 25 percent of market share going forward.

Meanwhile, Dec pointed out that LFP cathodes are already accounting for more than two thirds of the top 10 models on any EVs.

“It's quite natural that when you have a much lower cost solution, it is always going to be a threat to a nickel-rich battery chemistry,” Dec said.

“However, we do see this developing where a lot of the OEMs will offer LFP cathodes for the standard range and NCM (nickel-cobalt-manganese) cathodes for the longer range and higher price, so there will be this differentiation,” she added. “As time goes by, it will be up to the consumers (what they want to settle for) — but there is a differentiation, they are not used for the same type of vehicle, they provide two different things.”

That said, it is important for investors to keep in mind that, despite the future demand expected from batteries, stainless steel remains the main driver of nickel demand — a segment that will continue to be key for the market into 2022.

“While there is much excitement about the energy transition and vehicle electrification, stainless remains the primary demand area for nickel and this is continuing to grow in output, particularly in China and Indonesia,” Mitchell said.

According to the International Nickel Study Group, global demand for nickel is expected to increase to 3.04 million tonnes in 2022 from 2.77 million tonnes in 2021.

Overall, CRU expects to see steady demand in 2022. “We don't see a deficit, we do see a relatively balanced market,” Dec said.

Wood Mackenzie also expects to see a balanced market for 2022 currently with the risk on the oversupply depending on the growth in new capacity in Indonesia.

Nickel outlook 2022: What’s next


Commenting on catalysts to keep an eye out for in 2022, Mitchell said recycling will be a key focus area.

“Recycling developments are gaining pace and these ventures will be key to augmenting nickel supply in the future,” he said. “But all eyes will be on the HPAL and repurposed NPI lines to produce matte in Indonesia and how they perform. And what happens with the Filipino move to gradually cease ore exports.”

Speaking specifically about junior miners in 2022, Dec emphasized the need for funding as a key challenge that remains.

“I think this remains the problem, perhaps producers or those that could be funding them, they need to believe that the nickel price is sustainable to enter an investment to get such exposure,” she said.

Another challenge for miners is trust — in particular related to venturing into new technologies.

Looking over to prices, Wood Mackenzie expects nickel prices to remain strong at about US$19,800 in nominal dollar terms. Similarly, CRU expects prices to remain at high levels.

Don’t forget to follow us @INN_Resource for real-time news updates!

Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

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Analyst reviews Apple stock price target amid challenges

Here’s what could happen to Apple shares next.

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11 hours ago

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March 12, 2024

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They said it was bound to happen.

It was Jan. 11, 2024 when software giant Microsoft  (MSFT)  briefly passed Apple  (AAPL)  as the most valuable company in the world.

Microsoft's stock closed 0.5% higher, giving it a market valuation of $2.859 trillion. 

It rose as much as 2% during the session and the company was briefly worth $2.903 trillion. Apple closed 0.3% lower, giving the company a market capitalization of $2.886 trillion. 

"It was inevitable that Microsoft would overtake Apple since Microsoft is growing faster and has more to benefit from the generative AI revolution," D.A. Davidson analyst Gil Luria said at the time, according to Reuters.

The two tech titans have jostled for top spot over the years and Microsoft was ahead at last check, with a market cap of $3.085 trillion, compared with Apple's value of $2.684 trillion.

Analysts noted that Apple had been dealing with weakening demand, including for the iPhone, the company’s main source of revenue. 

Demand in China, a major market, has slumped as the country's economy makes a slow recovery from the pandemic and competition from Huawei.

Sales in China of Apple's iPhone fell by 24% in the first six weeks of 2024 compared with a year earlier, according to research firm Counterpoint, as the company contended with stiff competition from a resurgent Huawei "while getting squeezed in the middle on aggressive pricing from the likes of OPPO, vivo and Xiaomi," said senior Analyst Mengmeng Zhang.

“Although the iPhone 15 is a great device, it has no significant upgrades from the previous version, so consumers feel fine holding on to the older-generation iPhones for now," he said.

A man scrolling through Netflix on an Apple iPad Pro. Photo by Phil Barker/Future Publishing via Getty Images.

Future Publishing/Getty Images

Big plans for China

Counterpoint said that the first six weeks of 2023 saw abnormally high numbers with significant unit sales being deferred from December 2022 due to production issues.

Apple is planning to open its eighth store in Shanghai – and its 47th across China – on March 21.

Related: Tech News Now: OpenAI says Musk contract 'never existed', Xiaomi's EV, and more

The company also plans to expand its research centre in Shanghai to support all of its product lines and open a new lab in southern tech hub Shenzhen later this year, according to the South China Morning Post.

Meanwhile, over in Europe, Apple announced changes to comply with the European Union's Digital Markets Act (DMA), which went into effect last week, Reuters reported on March 12.

Beginning this spring, software developers operating in Europe will be able to distribute apps to EU customers directly from their own websites instead of through the App Store.

"To reflect the DMA’s changes, users in the EU can install apps from alternative app marketplaces in iOS 17.4 and later," Apple said on its website, referring to the software platform that runs iPhones and iPads. 

"Users will be able to download an alternative marketplace app from the marketplace developer’s website," the company said.

Apple has also said it will appeal a $2 billion EU antitrust fine for thwarting competition from Spotify  (SPOT)  and other music streaming rivals via restrictions on the App Store.

The company's shares have suffered amid all this upheaval, but some analysts still see good things in Apple's future.

Bank of America Securities confirmed its positive stance on Apple, maintaining a buy rating with a steady price target of $225, according to Investing.com. 

The firm's analysis highlighted Apple's pricing strategy evolution since the introduction of the first iPhone in 2007, with initial prices set at $499 for the 4GB model and $599 for the 8GB model.

BofA said that Apple has consistently launched new iPhone models, including the Pro/Pro Max versions, to target the premium market. 

Analyst says Apple selloff 'overdone'

Concurrently, prices for previous models are typically reduced by about $100 with each new release. 

This strategy, coupled with installment plans from Apple and carriers, has contributed to the iPhone's installed base reaching a record 1.2 billion in 2023, the firm said.

More Tech Stocks:

Apple has effectively shifted its sales mix toward higher-value units despite experiencing slower unit sales, BofA said.

This trend is expected to persist and could help mitigate potential unit sales weaknesses, particularly in China. 

BofA also noted Apple's dominance in the high-end market, maintaining a market share of over 90% in the $1,000 and above price band for the past three years.

The firm also cited the anticipation of a multi-year iPhone cycle propelled by next-generation AI technology, robust services growth, and the potential for margin expansion.

On Monday, Evercore ISI analysts said they believed that the sell-off in the iPhone maker’s shares may be “overdone.”

The firm said that investors' growing preference for AI-focused stocks like Nvidia  (NVDA)  has led to a reallocation of funds away from Apple. 

In addition, Evercore said concerns over weakening demand in China, where Apple may be losing market share in the smartphone segment, have affected investor sentiment.

And then ongoing regulatory issues continue to have an impact on investor confidence in the world's second-biggest company.

“We think the sell-off is rather overdone, while we suspect there is strong valuation support at current levels to down 10%, there are three distinct drivers that could unlock upside on the stock from here – a) Cap allocation, b) AI inferencing, and c) Risk-off/defensive shift," the firm said in a research note.

Related: Veteran fund manager picks favorite stocks for 2024

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Major typhoid fever surveillance study in sub-Saharan Africa indicates need for the introduction of typhoid conjugate vaccines in endemic countries

There is a high burden of typhoid fever in sub-Saharan African countries, according to a new study published today in The Lancet Global Health. This high…

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There is a high burden of typhoid fever in sub-Saharan African countries, according to a new study published today in The Lancet Global Health. This high burden combined with the threat of typhoid strains resistant to antibiotic treatment calls for stronger prevention strategies, including the use and implementation of typhoid conjugate vaccines (TCVs) in endemic settings along with improvements in access to safe water, sanitation, and hygiene.

Credit: IVI

There is a high burden of typhoid fever in sub-Saharan African countries, according to a new study published today in The Lancet Global Health. This high burden combined with the threat of typhoid strains resistant to antibiotic treatment calls for stronger prevention strategies, including the use and implementation of typhoid conjugate vaccines (TCVs) in endemic settings along with improvements in access to safe water, sanitation, and hygiene.

 

The findings from this 4-year study, the Severe Typhoid in Africa (SETA) program, offers new typhoid fever burden estimates from six countries: Burkina Faso, Democratic Republic of the Congo (DRC), Ethiopia, Ghana, Madagascar, and Nigeria, with four countries recording more than 100 cases for every 100,000 person-years of observation, which is considered a high burden. The highest incidence of typhoid was found in DRC with 315 cases per 100,000 people while children between 2-14 years of age were shown to be at highest risk across all 25 study sites.

 

There are an estimated 12.5 to 16.3 million cases of typhoid every year with 140,000 deaths. However, with generic symptoms such as fever, fatigue, and abdominal pain, and the need for blood culture sampling to make a definitive diagnosis, it is difficult for governments to capture the true burden of typhoid in their countries.

 

“Our goal through SETA was to address these gaps in typhoid disease burden data,” said lead author Dr. Florian Marks, Deputy Director General of the International Vaccine Institute (IVI). “Our estimates indicate that introduction of TCV in endemic settings would go to lengths in protecting communities, especially school-aged children, against this potentially deadly—but preventable—disease.”

 

In addition to disease incidence, this study also showed that the emergence of antimicrobial resistance (AMR) in Salmonella Typhi, the bacteria that causes typhoid fever, has led to more reliance beyond the traditional first line of antibiotic treatment. If left untreated, severe cases of the disease can lead to intestinal perforation and even death. This suggests that prevention through vaccination may play a critical role in not only protecting against typhoid fever but reducing the spread of drug-resistant strains of the bacteria.

 

There are two TCVs prequalified by the World Health Organization (WHO) and available through Gavi, the Vaccine Alliance. In February 2024, IVI and SK bioscience announced that a third TCV, SKYTyphoid™, also achieved WHO PQ, paving the way for public procurement and increasing the global supply.

 

Alongside the SETA disease burden study, IVI has been working with colleagues in three African countries to show the real-world impact of TCV vaccination. These studies include a cluster-randomized trial in Agogo, Ghana and two effectiveness studies following mass vaccination in Kisantu, DRC and Imerintsiatosika, Madagascar.

 

Dr. Birkneh Tilahun Tadesse, Associate Director General at IVI and Head of the Real-World Evidence Department, explains, “Through these vaccine effectiveness studies, we aim to show the full public health value of TCV in settings that are directly impacted by a high burden of typhoid fever.” He adds, “Our final objective of course is to eliminate typhoid or to at least reduce the burden to low incidence levels, and that’s what we are attempting in Fiji with an island-wide vaccination campaign.”

 

As more countries in typhoid endemic countries, namely in sub-Saharan Africa and South Asia, consider TCV in national immunization programs, these data will help inform evidence-based policy decisions around typhoid prevention and control.

 

###

 

About the International Vaccine Institute (IVI)
The International Vaccine Institute (IVI) is a non-profit international organization established in 1997 at the initiative of the United Nations Development Programme with a mission to discover, develop, and deliver safe, effective, and affordable vaccines for global health.

IVI’s current portfolio includes vaccines at all stages of pre-clinical and clinical development for infectious diseases that disproportionately affect low- and middle-income countries, such as cholera, typhoid, chikungunya, shigella, salmonella, schistosomiasis, hepatitis E, HPV, COVID-19, and more. IVI developed the world’s first low-cost oral cholera vaccine, pre-qualified by the World Health Organization (WHO) and developed a new-generation typhoid conjugate vaccine that is recently pre-qualified by WHO.

IVI is headquartered in Seoul, Republic of Korea with a Europe Regional Office in Sweden, a Country Office in Austria, and Collaborating Centers in Ghana, Ethiopia, and Madagascar. 39 countries and the WHO are members of IVI, and the governments of the Republic of Korea, Sweden, India, Finland, and Thailand provide state funding. For more information, please visit https://www.ivi.int.

 

CONTACT

Aerie Em, Global Communications & Advocacy Manager
+82 2 881 1386 | aerie.em@ivi.int

Journal

The Lancet Global Health

Method of Research

Observational study

Subject of Research

People

Article Title

Incidence of typhoid fever in Burkina Faso, Democratic Republic of the Congo, Ethiopia, Ghana, Madagascar, and Nigeria (the Severe Typhoid in Africa programme): a population-based study

Article Publication Date

12-Mar-2024

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US Spent More Than Double What It Collected In February, As 2024 Deficit Is Second Highest Ever… And Debt Explodes

US Spent More Than Double What It Collected In February, As 2024 Deficit Is Second Highest Ever… And Debt Explodes

Earlier today, CNBC’s…

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March 12, 2024

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US Spent More Than Double What It Collected In February, As 2024 Deficit Is Second Highest Ever... And Debt Explodes

Earlier today, CNBC's Brian Sullivan took a horse dose of Red Pills when, about six months after our readers, he learned that the US is issuing $1 trillion in debt every 100 days, which prompted him to rage tweet, (or rageX, not sure what the proper term is here) the following:

We’ve added 60% to national debt since 2018. Germany - a country with major economic woes - added ‘just’ 32%.   

Maybe it will never matter.   Maybe MMT is real.   Maybe we just cancel or inflate it out. Maybe career real estate borrowers or career politicians aren’t the answer.

I have no idea.  Only time will tell.   But it’s going to be fascinating to watch it play out.

He is right: it will be fascinating, and the latest budget deficit data simply confirmed that the day of reckoning will come very soon, certainly sooner than the two years that One River's Eric Peters predicted this weekend for the coming "US debt sustainability crisis."

According to the US Treasury, in February, the US collected $271 billion in various tax receipts, and spent $567 billion, more than double what it collected.

The two charts below show the divergence in US tax receipts which have flatlined (on a trailing 6M basis) since the covid pandemic in 2020 (with occasional stimmy-driven surges)...

... and spending which is about 50% higher compared to where it was in 2020.

The end result is that in February, the budget deficit rose to $296.3 billion, up 12.9% from a year prior, and the second highest February deficit on record.

And the punchline: on a cumulative basis, the budget deficit in fiscal 2024 which began on October 1, 2023 is now $828 billion, the second largest cumulative deficit through February on record, surpassed only by the peak covid year of 2021.

But wait there's more: because in a world where the US is spending more than twice what it is collecting, the endgame is clear: debt collapse, and while it won't be tomorrow, or the week after, it is coming... and it's also why the US is now selling $1 trillion in debt every 100 days just to keep operating (and absorbing all those millions of illegal immigrants who will keep voting democrat to preserve the socialist system of the US, so beloved by the Soros clan).

And it gets even worse, because we are now in the ponzi finance stage of the Minsky cycle, with total interest on the debt annualizing well above $1 trillion, and rising every day

... having already surpassed total US defense spending and soon to surpass total health spending and, finally all social security spending, the largest spending category of all, which means that US debt will now rise exponentially higher until the inevitable moment when the US dollar loses its reserve status and it all comes crashing down.

We conclude with another observation by CNBC's Brian Sullivan, who quotes an email by a DC strategist...

.. which lays out the proposed Biden budget as follows:

The budget deficit will growth another $16 TRILLION over next 10 years. Thats *with* the proposed massive tax hikes.

Without them the deficit will grow $19 trillion.

That's why you will hear the "deficit is being reduced by $3 trillion" over the decade.

No family budget or business could exist with this kind of math.

Of course, in the long run, neither can the US... and since neither party will ever cut the spending which everyone by now is so addicted to, the best anyone can do is start planning for the endgame.

Tyler Durden Tue, 03/12/2024 - 18:40

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