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NPI Evolution & Influence on Nickel Price - :: International · PDF file · 2013-10-09NPI Evolution & Influence on Nickel Price A Presentation for INSG Oct, 2013 ........

Mar 27, 2018

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  • 2013/10/9

    1

    NPI Evolution & Influence on Nickel Price

    A Presentation for INSG

    Oct, 2013

    SMM. All rights reserved.

    Agenda

    NPI Evolution Drives Down Nickel Price

    Latest Trend of NPI Investment

    About SMM

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  • 2013/10/9

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    SMM. All rights reserved.

    Nickel price has fallen by more than 50% since 2011

    3

    LME Nickel Price Trend

    Down by >50%

    Data source: LME, SMM

    Unit: $/ton

    LME Nickel price has fallen from $29,065/ton in Feb, 2011 to only $13,310 in Jul, 2013, dropping by more than 50%.

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    SMM. All rights reserved.

    Slowdown of demand growth, oversupply of Ni and lower cost of NPI push the price down

    Slowdown of Demand Growth

    China stainless steel, as the major downstream of Nickel, has driven the global Ni consumption slow down

    Lower Cost of NPI

    RKEF technology in China is booming

    Smelters with RKEF are mainly distributed in costal provinces

    RKEF has cost advantage compared with BF and EF

    Oversupply of Nickel(Including NPI)

    China NPI has contributed the global Ni supply increase and replaced other Ni materials in SST production

    Global Nickel market has show supply surplus since 2011

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    Growth slowdown of demand, oversupply of Nickel and lower cost of NPI push the price down

  • 2013/10/9

    3

    SMM. All rights reserved.

    China stainless steel has driven the global Ni consumption slow down

    China World

    Data source: SMM, Brook Hunt

    Stainless steel is the largest Nickel downstream sector in China and the world as well.

    Compared to 67% of Nickel consumption in the world, China stainless steel companies consumed more than 80% of the total.

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    Nickel Consumption Structure

    1

    China stainless steel production accounted for more than 45% of total world in 2012 and has played the role as engine in last few years.

    With China stainless steel output growth slowing down, global stainless steel production growth rate has decreased from about 25% in 2010 to only 5% in 2012.

    Global Stainless Steel Output (2007-2012)

    Data source: ISSF, SMM

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    Unit: kt

    World ex China ChinaWorld Growth Rate China Growth Rate

    SMM. All rights reserved.

    Slowdown of demand growth, oversupply of Ni and lower cost of NPI push the price down

    Slowdown of Demand Growth

    China stainless steel, as the major downstream of Nickel, has driven the global output slow down

    Lower Cost of NPI

    RKEF technology in China is booming

    Smelters with RKEF are mainly distributed in costal provinces

    RKEF has cost advantage compared with BF and EF

    Oversupply of Nickel(Including NPI)

    China NPI has contributed the global Ni supply increase and largely replaced other Ni materials in SST production

    Global Nickel market has shown supply surplus since 2011

    1 2 3

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    Growth slowdown of demand, oversupply of Nickel and lower cost of NPI push the price down

  • 2013/10/9

    4

    SMM. All rights reserved.

    China NPI has contributed the global Ni supply increase and largely replaced other Ni materials in SST production

    In recent years, due to the cost and accessibility advantage in China, NPI has replaced other nickel sources such as refined nickel, Cuban nickel oxide, imported ferronickel, etc., and is estimated to share more than 50% of nickel supply in SST production in 2013

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    2

    Global Nickel Output

    Source of Nickel Used in Chinese Stainless Steel (SST) Production

    Due to the fast increase of NPI production, China has been the largest contributor to global primary nickel output growth since 2009, with proportion from only about 5% in 2008 to more than 20% in 2013.

    Unit: kt

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    NPI output(Ni Content)world ex NPINPI Proportion

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    NPI Refined NiScrap Import FerroNiCuba Ni Oxide

    SMM. All rights reserved.

    Global Ni Balance & LME Ni Price

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    2

    Due to the decelerating demand growth and fast supply increase driven by China NPI production, global nickel market has shown supply surplus since 2011, resulting in the nickel price down.

    Global Nickel market has shown supply surplus since 2011

    Data source: INSG, SMM

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    2007 2008 2009 2010 2011 2012 2013E

    Balance Nickle average price

    Unit1,000Mt UnitUSD/mt

  • 2013/10/9

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    SMM. All rights reserved.

    Slowdown of demand growth, oversupply of Ni and lower cost of NPI push the price down

    Slowdown of Demand Growth

    China stainless steel, as the major downstream of Nickel, has driven the global output slow down

    Lower Cost of NPI

    RKEF technology in China is booming

    Smelters with RKEF are mainly distributed in costal provinces

    RKEF has cost advantage compared with BF and EF

    Oversupply of Nickel(Including NPI)

    China NPI has contributed the global Ni supply increase and replaced other Ni materials in SST production

    Global Nickel market has show supply surplus since 2011

    1 2 3

    9

    Growth slowdown of demand, oversupply of Nickel and lower cost of NPI push the price down

    SMM. All rights reserved.

    RKEF process, as a new NPI production technology, boomed in recent years

    3

    Supply Proportion of Different Types of NPI, 2009-2013E

    10

    As SMM estimated, RKEF process produced more than 20% of NPI in China in 2012 and will increase to about 50% in 2013.

    Data source: SMM

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    2009 2010 2011 2012 2013E

    BF1-2% BF4-8% EAF(10-15%) RKEF10-15%

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    SMM. All rights reserved.

    Smelters with RKEF are mainly distributed in costal provinces

    3

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    RKEF Plant Distribution and Typical Process

    Electric Arc Furnace

    Rotary Kiln

    Dryer Kiln

    NPI

    Wet Ore

    Laterite Ore Mining

    Smelters with RKEF are mainly distributed in costal provinces of East and South China with low logistics cost for imported laterite ore.

    Provinces with RKEF Plants

    Data source: SMM

    SMM. All rights reserved.

    RKEF has cost advantage compared with BF/EF

    3

    Cost Comparison of Technologies

    12

    Benefitting from the saving of power (3,500-4,000KWH/ton for RKEF VS 6,000-7,000KWH/ton for EF), logistics (close to the port), etc, RKEF process has cost advantage, which is usually over RMB2,000/ton comparing to BF and EF process.

    Data source: SMM

    Unit: $/ton

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    2012/1/4 2012/4/4 2012/7/4 2012/10/4 2013/1/4 2013/4/4 2013/7/4

    Fujian (RKEF) Inner Mongolia EF

    Jiangsu and Shandong (EF) Shandong (4-6% BF)

    LME nickle price

  • 2013/10/9

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    SMM. All rights reserved.

    Nickel Price is expected to be between 13,600-15,000 $/ton in Q4, 2013

    LME Nickel Price Expectation

    Data source: LME, SMM

    Unit: $/ton

    13

    2013 Q4 price range: 13,600-15,000 $/ton

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    Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13

    13,600

    SMM. All rights reserved.

    Agenda

    NPI Evolution Drives Down Nickel Price

    Latest Trend of NPI Investment

    About SMM

    1

    2

    3

    14

  • 2013/10/9

    8

    SMM. All rights reserved.

    PT Inco

    Antam-1

    Antam-2

    Antam-3

    MCOERN-2

    MCOERN-1

    Weda Bay Nickel

    TITAN

    ERAMET

    Jiangsu Mingzhu International

    Beijing Shenwu Environment & Energy Technology Co., Ltd.

    Fujian Pan-Chinese Mining

    IndoferroHOROC

    Hanwang Industrial Group

    Tsingshan Group

    New Metallurgy & Dafeng

    Hong hehenghao

    SOLWAY

    BOSOWABukaka Teknik Utama

    Bakti Bumi Sulawesi

    INTEGRA

    Operating Plant Planned Plant ex China

    Rush to Indonesia

    15

    Chinese Planned PlantData source: SMM

    SMM. All rights reserved.

    Gaining control of Laterite ore is the prime focus for NPI producers

    Typical RKEF Cost Structure (2012)

    Data source: SMM

    As Laterite ore is the most important raw material for NPI and accounts for more than 40% of total cost, gaining control of Laterite resources to secure stable supply and low ore cost, has become the prime focus for NPI producers.

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    Laterite Ore

    Bituminous

    Electricity

    Others

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    2012/1/4 2012/3/4 2012/5/4 2012/7/4 2012/9/4 2012/11/4

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    SMM. All rights reserved.

    Indonesias banning export policy makes NPI producers rush to smelting in Indonesia

    17

    Chinas Monthly Laterite Imports

    Data source: China Customs, SMM

    Indonesia and Philippines are the two dom

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