瑞信-亚太地区-金属与采矿行业-商品笔记：镍价在意外事件后似乎走强-2019.8.19-23页.pdf

DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES,ANALYST CERTIFICATIONS,LEGAL ENTITY DISCLOSURE AND THE STATUS OF NON-US ANALYSTS.US Disclosure:Credit Suisse does and seeks to do business with companies covered in its research reports.As a result,investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report.Investors should consider this report as only a single factor in making their investment decision.19 August 2019 Asia Pacific/Australia Equity Research Diversified Metals&Mining Commodities Notes Research Analysts Matthew Hope 61 2 8205 4669 matthew.hopecredit- SECTOR REVIEW Nickel looks tighter following surprises Speculators scrambled to cover nickel shorts when the price began to rally from 16 July,probably due to a producer buying LME nickel.On 18 July,Reuters said the buyer was Tsingshan,citing sources.It was initially unclear why the additional nickel is needed,but there are now two alternative reasons:(1)Tsingshan may be accelerating stainless production and stockpiling in India to beat possible ADDs arising from Indias antidumping investigation that began 3 July.Or:(2)Chinas NPI supply may tighten sooner than expected as news broke(Reuters 8 Aug)that the Indonesian Government is considering bringing forward the nickel ore export ban that is currently due to take effect on 2022.Figure 1:Nickel price rallied from mid-July Q Source:Reuters,Antaike,Credit Suisse estimates The short covering rally is over,but other prices suggest fundamental tightness remains Wood Mackenzie noted Tsingshan offered third-party NPI makers 10%more for product to secure supply in China.Assuming this tightness is real,we now expect it will support nickel above US$7/lb for the remainder of this year,irrespective of the Indonesian export ban decision.We expect the price to soften to US$6.50/lb next year on an assumption that Indonesia will not impose the export ban in 2020.Demand fundamentals look bleak:Global growth may be giving way;we expect Chinas housing construction to slow;Tsingshan may have finished stockpiling in India;and theres a stainless steel glut in China.If the export ban is brought forward to 2021,the nickel price could climb to US$6.75/lb.China NPI production would not drop immediately but ore prices would rise,lifting costs.Over time,we expect Indonesian NPI to replace some of Chinas production,but smelter capacity may be insufficient by 2021.But LT prices should remain capped below US$7/lb.Incentive prices remain unchanged,with Tsingshan and Delong bringing on NPI with all-in cash costs below US$4.50/lb.100 110 120 130 140 150 160 170 180 190 200 210 11,000 11,500 12,000 12,500 13,000 13,500 14,000 14,500 15,000 15,500 16,000 16,50014-May21-May28-May04-Jun11-Jun18-Jun25-Jun02-Jul09-Jul16-Jul23-Jul30-Jul06-Aug13-Augstocks(kt)price(US$/t)LME stocksSHFE stocksLME spot Nickel priceChangjiang ex VAT 19 August 2019 Commodities Notes 2 Figure 2:Credit Suisse commodity price forecasts Source:Credit Suisse estimates 20182019202020212022LTYr AvgQ1 Q2(f)Q3(f)Q4(f)Yr Avg(f)Q1(f)Q2(f)Q3(f)Q4(f)Yr Avg(f)Yr Avg(f)Yr Avg(f)(real)Iron OreIron ore fines-62%-China CFR(US$/t)69839511095969085858085756575Iron ore-58%low Al,China CFR(US$/t)59758710288888378787378675765Iron ore-58%high Al,China CFR(US$/t)4060819582807470706670605260Iron ore-65%China CFR(US$/t)909511012911211210498989298867586FreightCapesize WA-China(US$/t)7.65.66.07.07.06.48.08.09.09.08.5101115Handysize Aust-China(US$/t)2018151818172121242423262942Coking CoalHard coking coal(US$/t)209210203200205204205205205205205200180160Semi soft coal(US$/t)136132138130133133133133133133133130117105PCI coal(US$/t)150141150150154149154154154154154150135120Thermal CoalNewcastle -6000kcal FOB US$/t10594858585878080808080807575Newcastle high-ash-5500kcal FOB US$/t7260606262616060606060605562ManganeseManganese Ore-44%($/dmtu)7.256.536.505.505.506.015.005.005.005.005.004.004.004.00Base MetalsCopper(US$/t)6,5326,2216,4005,9505,9506,1305,7305,7305,7305,7305,7305,7305,7306,600Aluminium(US$/t)2,1101,8631,9801,9801,9801,9511,9801,9801,9801,9801,9802,1002,3102,866Aluminium-Mid West Premium382387419419419411440440440440440450450175Aluminium-Japan Premium117110110110100103100100101102103102106110Aluminium-Rotterdam Premium976888888883100100100100100102106110Alumina spot(US$/t)474387420380380392360340340400360375385400Bauxite-China CIF(US$/t)4741444444434444444444465167Nickel(US$/t)13,13012,39312,78013,22513,22512,90614,33014,33014,33014,33014,33014,33014,33014,775Lead(US$/t)2,2412,0341,9501,9501,9501,9711,8501,8501,8501,8501,8501,9001,9502,000Zinc(US$/t)2,9232,7072,4002,4002,4002,4772,3002,3002,3002,3002,3002,3402,3602,300Mineral SandsZircon(US$/t)1,3381,5201,5201,5201,5701,5331,5701,5701,5701,5701,5701,5201,5201,250Rutile(US$/t)9451,0001,0001,0001,0001,0001,0001,0001,0001,0001,0001,0431,1131,250Synthetic Rutile(US$/t)7508758758758758758758758758758759149761,100Ilmenite(Sulfate)(US$/t)203180200200200195200200200200200202205200TiO2 slag SA Chloride 86%(US$/t)6958508508508508508508508508508508789241,000Precious MetalsGold(US$/oz)1,2711,3031,2701,2651,2901,2821,3001,3001,3001,3001,3001,3001,3001,300Silver(US$/oz)15.7215.5614.5614.6714.9114.9316.0016.0016.0016.0016.0016.0016.0016.00LithiumLithium Carbonate14,23812,27813,50013,50013,50013,19512,00012,00012,00012,00012,0009,0008,50011,500Oil&GasCrude oil-Brent($/bbl)71.663676769676767676767707070Gas-Henry Hub($/mmbtu)3.152.912.752.752.752.792.752.752.752.752.752.752.753.75Commodity CurrenciesAUD/USD0.750.710.710.720.720.720.730.730.740.740.740.750.750.75 19 August 2019 Commodities Notes 3 Nickel market looks tighter following surprises Nickel price expectations following the rally In light of the nickel price rocketing to$7.40/lb rally,our forecasts look underdone.We examine the causes of the rally and revise our current expectations.The nickel price rally appears to have been driven by:Stronger global stainless steel production than the market expected;The Indonesian Government considering bringing forward from 2022 the export ban on nickel ore;Reports of a producer buying significant quantities of LME nickel;Tsingshan possibly building stainless HRC stockpiles in India,and bidding up 3rd-party NPI prices by 10%;and Short covering.The short covering undoubtedly drove the speed and violence of the price rally,but that driver is probably largely spent.It should now be fundamentals of supply and demand that take control of the price.Apparent tightness in nickel market should support Ni above$7/lb for 2H Right now,the uncertainty of the Indonesian Governments decision about the export ban is a key factor in keeping the nickel price high.But once resolution is reached,we believe potential tightness in nickel supply indicated by higher contract NPI prices and buying of LME nickel will support the nickel price above$7/lb high for the next half year,despite a worsening macro backdrop.The reason for the tightness may be Tsingshan planning to build stockpiles of stainless HRC in India ahead of possible ADDs(discussed below).The stainless stockpiling would require full capacity from its Indonesian stainless plant.Tsingshan also wants to operate its two China stainless melting plants at full capacity but that requires more nickel units than Tsingshan has,hence it contracted third-party NPI at higher prices,and Reuters alleged it bought significant nickel on the LME.2020:If Indo ore exports continue,nickel prices should soften to$6.50/lb The nickel price next year is highly dependent on the Indonesian export ban decision.Our best-guess is that the export ban may be brought forward to 2021.We doubt it would be applied next year as that would deliver a fiscal shock to the government from lost export sales,while the 22 new smelter builds that the Government says are underway need time to be completed.If there is no export ban in place next year,we expect the nickel price to weaken on softer demand and growing supply.The price is likely to descent from$7/lb,reach$6/lb at the lows and climb later in the year Softer demand:The outlook for the global economy is obviously rather poor at present and a global growth slump may be underway next year.Independent of global growth,we also expect China housing construction to slow.And on a nickel-specific issue,China has built a stainless steel glut this year.It may continue to produce at high rates in 2H,as producers seem to be competing for market share,but by next year,with potential slowing demand,producers will need to slow production to deal with the overhang.And if Tsingshan is building a stainless steel stockpile in India,it may slow after a five months of growth through 2H-19.The stockpile is of course just a pull-forward of nickel demand.Higher Indonesian NPI supply:As smelter development progresses in Indonesia,more NPI should be available for export in 2020.During 2019,the three biggest 19 August 2019 Commodities Notes 4 smelter developers in Indonesia Tsingshan,Delong and Jinchuan are expected to add 160ktpa of Ni in NPI capacity.Tsingshan and Delong also plan to add more stainless capacity in Indonesia,but the melting works may be delayed given the difficulties Tsingshan has faced in placing its current HRC production.2021:price may reach$6.75/lb if Indo ore export ban is brought forward.If the Indonesian export ban is brought forward from 2022,it will tighten supply ahead of the full ramp-up of Indonesian smelters,so it should increase the price beyond our current forecast($6/lb in 2021).However,we do not expect a repeat of the$2/lb lift in the nickel price that occurred in 2014 when the first Indonesian export ban was imposed(Figure 3).At that time there was a wide expectation that Chinas NPI output would plummet,as the Street believed NPI could not be produced from RKEFs without high-grade Indonesian laterite.The Street was wrong,and demand dropped faster than supply from the end of 2014,cratering the price.We expect the market will be a lot more cautious on the nickel price outlook whenever the new ore export ban is imposed as weve been here before,and Chinas NPI producers proved adaptable and versatile in ways the Street did not foresee.All the expectations of the export ban are probably built in to the price already,while stronger Indonesian NPI supply by 2021 should mean slacker conditions than now.If the export ban steps forward to 2021,we expect the price will reach$6.50/lb.Our LT view is unchanged:Nothing has altered the incentive price needed to bring on fresh NPI supply.Figure 3:Nickel prices and exchange stockpiles Source:Reuters,Antaike,Credit Suisse estimates Does the market need more hard-rock nickel?We dont believe so.Hard rock nickel mines produce sulphide concentrate that is smelted and refined into class 1 nickel metal.This can be used for stainless or non-stainless applications including battery cathodes.In contrast,the Indonesian laterites have so far been used for NPI/ferronickel production suitable only for stainless steel,while the HPAL projects in the country likely to feed metal refineries underway are yet to be proven.But ferronickel can also be refined to class 1 nickel via the matte process,and we understand the cost is around$1.00-$1.50/lb.With the NPI production have all in costs of not much above$4/lb for the new Indonesian smelters and the potential to produce class 1 nickel for no more than$5.50/lb,we see no insurmountable requirement for new sulphide operations.-4 8 12 16 20 24-100 200 300 400 500 600Jan-12Apr-12Jul-12Oct-12Jan-13Apr-13Jul-13Oct-13Jan-14Apr-14Jul-14Oct-14Jan-15Apr-15Jul-15Oct-15Jan-16Apr-16Jul-16Oct-16Jan-17Apr-17Jul-17Oct-17Jan-18Apr-18Jul-18Oct-18Jan-19Apr-19Jul-19Price(US$000/t)Stocks(kt)SHFE stocksLME stocksLME PriceChanjiang price ex VAT 19 August 2019 Commodities Notes 5 Anatomy of the nickel price rally Price run from mid-July surprised a market focused on macro downside Much of the nickel rally has been attributed in the press to news about the Indonesian plan to re-impose a ban on nickel laterite exports.The raw material export ban was in place from 2014 to 2016,but was lifted in 2017 albeit under a quota system where only companies building nickel smelters in Indonesia would be permitted to export.The ban was intended to be lifted for five years only,and to restart in 2022.On 8 July,in a parliamentary hearing,the Indonesian Energy and Minerals Resources Minister reaffirmed the cessation of raw material exports from 2022.Over the following week the nickel price lifted 8%(Figure 4).But the price really began to run hard from 16 July,and on 18 July,Reuters reported that Tsingshan had been buying significant quantities of LME nickel,citing sources.The real reason for the price surge to the 18 July peak was probably the significant buying on the LME,rather than old-news about a distant nickel export ban.Figure 4:LME spot and China spot nickel prices+exchange stocks Source:Reuters,Credit Suisse estimates After settling at higher levels for a couple of weeks,the nickel rally was reignited on 8 August,when Reuters reported that Indonesia was considering bringing forward the ore export ban from 2022.This idea was exposed when the Indonesian nickel miners association urged the government not to bring forward the date,with the group saying it had indirect knowledge of such a plan.The nickel price climbed 8%on 8 August.The proposal to bring forward the export ban has subsequently been confirmed,with some Ministers in favour of it.The final decision is now up to the Indonesian President.,with nothing yet announced.The savage price reaction,particularly in Chinese prices,was most likely due to metal speculators,with a bull assault routing short positions on 8 July.Reuters reported that the London Street recognised the signs of a battle,and as the price shot upwards,certain speculators may have been caught short,scrambling to cover positions.The timing of the move early hours in London,but mid-morning Shanghai points to Chinese speculators as being the prime movers.100 110 120 130 140 150 160 170 180 190 200 210 11,000 11,500 12,000 12,500 13,000 13,500 14,000 14,500 15,000 15,500 16,000 16,50018-May25-May01-Jun08-Jun15-Jun22-Jun29-Jun06-Jul13-Jul20-Jul27-Jul03-Aug10-Aug17-Augstocks(kt)price(US$/t)LME stocksSHFE stocksLME spot Nickel priceChangjiang ex VAT 19 August 2019 Commodities Notes 6 Was the initial price rally actually fueled by talk of an early ban?We can now see two possibilities for the origin of the nickel price rally:As reported chronologically:Metal speculators expecting downside to nickel,began to cut short positions in mid-July as reports trickled in of relatively strong stainless steel production.This was accelerated by a large player buying significant warrants on the LME.By 18 July,Reuters was pointing to Tsingshan as being the buyer.The nickel price took a breather for a couple of weeks,but then the rally resumed on 8 August as news broke of the proposal to b