A matter of class in the nickel market

The bottlenecks in supplying suitable feedstocks to meet rapid demand growth continue to be a key issue. Earlier this year, Chinese Tsingshan announced plans to convert NPI into nickel matte which can be further processed into sulphate. The market plunged in response to this news as this was supposed to ease the tightness in this part of the market.

A matter of class in the nickel market

However, though technically viable on a commercial scale, this route requires NPI, matte and sulphate to be constantly profitable. As for the more traditional route (i.e. hydrometallurgical), the supply of mixed hydroxide precipitate (MHP) has grown fast after the commissioning of China Lygend Mining's hydrometallurgical project in Indonesia and First Quantum's reinvigorated Ravensthorpe project in Australia.

The timing and scale of delivery are important in the supply of raw materials to produce battery-grade nickel. This is often a swing factor that jolts the market. Based on current timelines, we expect the battery-grade nickel market to remain in deficit, albeit narrower, over 2022. This is partly because of displacement pressure from lithium-iron-phosphate (LFP) chemistry particular in the China market at the lower end of the vehicle segment.