DISCLOSUREAPPENDIXATTHEBACKOFTHISREPORTCONTAINSIMPORTANTDISCLOSURES,ANALYSTCERTIFICATIONS,LEGALENTITYDISCLOSUREANDTHESTATUSOFNON-USANALYSTS.USDisclosure:CreditSuissedoesandseekstodobusinesswithcompaniescoveredinitsresearchreports.Asaresult,investorsshouldbeawarethattheFirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreport.Investorsshouldconsiderthisreportasonlyasinglefactorinmakingtheirinvestmentdecision.19August2019AsiaPacific/AustraliaEquityResearchDiversifiedMetals&MiningCommoditiesNotesResearchAnalystsMatthewHope61282054669matthew.hope@credit-suisse.comSECTORREVIEWNickellookstighterfollowingsurprises■Speculatorsscrambledtocovernickelshortswhenthepricebegantorallyfrom16July,probablyduetoaproducerbuyingLMEnickel.On18July,ReuterssaidthebuyerwasTsingshan,citingsources.Itwasinitiallyunclearwhytheadditionalnickelisneeded,buttherearenowtwoalternativereasons:(1)TsingshanmaybeacceleratingstainlessproductionandstockpilinginIndiatobeatpossibleADDsarisingfromIndia'santidumpinginvestigationthatbegan3July.Or:(2)China'sNPIsupplymaytightensoonerthanexpectedasnewsbroke(Reuters8Aug)thattheIndonesianGovernmentisconsideringbringingforwardthenickeloreexportbanthatiscurrentlyduetotakeeffecton2022.Figure1:Nickelpriceralliedfrommid-JulyQSource:Reuters,Antaike,CreditSuisseestimates■Theshortcoveringrallyisover,butotherpricessuggestfundamentaltightnessremains–WoodMackenzienotedTsingshanofferedthird-partyNPImakers10%moreforproducttosecuresupplyinChina.Assumingthistightnessisreal,wenowexpectitwillsupportnickelaboveUS$7/lbfortheremainderofthisyear,irrespectiveoftheIndonesianexportbandecision.■WeexpectthepricetosoftentoUS$6.50/lbnextyearonanassumptionthatIndonesiawillnotimposetheexportbanin2020.Demandfundamentalslookbleak:Globalgrowthmaybegivingway;weexpectChina'shousingconstructiontoslow;TsingshanmayhavefinishedstockpilinginIndia;andthere'sastainlesssteelglutinChina.■Iftheexportbanisbroughtforwardto2021,thenickelpricecouldclimbtoUS$6.75/lb.ChinaNPIproductionwouldnotd...
