Ann: Mulga Tank Mineral Resource Over 5Mt to Contained Nickel, page-145

The rhetoric.
Claiming prices at $16,000/tonne are "low" and the market is "oversupplied" due to Indonesia’s ~1.8 million-tonne output, has been shown to overstate the crisis, as prices align with the 20-year median ($16,200) and surpluses are cyclical suggests intentional manipulation to depress sentiment, so which actors might benefit from promoting this bearish narrative, intentionally or otherwise, within the 2005-2025 nickel market context and focus on stakeholders who gain from negative sentiment .

Stakeholders Who Stand to Gain

Actors in the nickel market who might gain from promoting or amplifying the "low prices" and "oversupply" rhetoric, exploring their motives and mechanisms .

1. Low-Cost Producers.

• Who They Are: Indonesian nickel producers, often backed by Chinese firms , dominate with ~1.8 million tonnes of 2024’s ~3.6 million-tonne global supply. Their production costs ($8,000-$10,000/tonne for NPI and HPAL) are among the lowest.
• How They Gain:
  • Market Share Consolidation: Depressed prices (~$16,000/tonne) squeeze high-cost producers (e.g., Australia, Canada, costs $18,000-$22,000/tonne), forcing mine closures or reduced output, as seen in 2023-2024 with Australian miners. This cedes market share to low-cost Indonesian operations.
  • Asset Acquisition: Lower market sentiment reduces valuations of nickel assets, enabling Chinese-backed firms to acquire mines or projects at bargain prices, as seen in past cycles (e.g., 2015-2019 slump led to Chinese investments in Indonesia).
  • Long-Term Dominance: A bearish narrative discourages Western investment in new nickel projects, reinforcing Indonesia’s ~50% supply share.
• How They Contribute to the Rhetoric:
  • Chinese and Indonesian firms benefit from oversupply fears tied to their production surge. Their aggressive output growth since 2018, post-Indonesia’s 2014-2017 export ban, fuels analyst and media reports of a “glut.”
    
    
• Motive:
  • While their overproduction creates the surplus (~200,000 tonnes in 2024) that drives the rhetoric. Lower prices benefit their cost structure and weaken competitors, aligning with China’s strategic goal of controlling critical minerals.
• Evidence:
  • Indonesia’s output grew ~200% from 2018 to 2024, creating the surplus. In 2015-2019, similar oversupply (100,000-200,000 tonnes) led to closures of high-cost mines, benefiting low-cost producers.
  • Chinese firms acquired stakes in Indonesian projects during the 2015-2019 slump, capitalizing on low valuations.

2. Short Sellers and Speculative Traders

• Who They Are: Hedge funds, commodity traders, and speculators betting on price movements via LME futures or nickel-related equities.
• How They Gain:
  • Short Selling Profits: Traders who short nickel futures or stocks of nickel producers (e.g., Glencore, Vale) profit when prices or share values drop. The 2023-2024 price decline (~$20,900 to $16,000) rewarded bearish bets.
  • Market Volatility: Exaggerated rhetoric fuels volatility, creating trading opportunities. The 2022 LME short squeeze ($100,000/tonne peak) showed nickel’s susceptibility to speculative swings, and a bearish narrative in 2024 keeps markets jittery.
• How They Contribute to the Rhetoric:
  • Traders amplify bearish sentiment through market signals (e.g., heavy short positions) or by leaking pessimistic outlooks to media, as seen in commodity markets during 2015-2019 when short sellers bet against nickel.
  • Social media platforms like in 2023-2024 saw traders hyping oversupply fears to drive sentiment .
• Motive :
  • Deliberate pessimism maximizes short-term profits. By exaggerating Indonesia’s impact or stainless steel weakness (70% of 2024 demand), traders depress prices below fundamentals (e.g., $16,000 is viable for low-cost producers).
• Evidence:
  • LME data showed increased short positions in 2023 as prices fell from ~$20,900, mirroring 2015-2016 when short sellers profited from $8,600 lows.
  • The 2022 LME crisis, partly driven by short covering, highlighted traders’ influence on sentiment, suggesting potential for bearish manipulation in 2024.

3. Competing Critical Minerals Sectors

• Who They Are: Producers of alternative battery materials (e.g., lithium, cobalt) or competing stainless steel inputs (e.g., chrome, scrap steel).
• How They Gain:
  • Battery Market Share: Depressed nickel sentiment diverts investment to lithium or cobalt, which compete in EV batteries. Lithium prices also slumped in 2023-2024, but a weaker nickel outlook could prioritize lithium-ion chemistries with less nickel.
  • Stainless Steel Inputs: Lower nickel prices reduce costs for stainless steel manufacturers using NPI or ferronickel, benefiting chrome producers or scrap recyclers who compete with nickel’s 70% demand share.
• How They Contribute to the Rhetoric:
  • Lithium or cobalt producers indirectly amplify nickel’s oversupply narrative through industry lobbying or reports favoring their metals. For example, cobalt-focused firms in 2023-2024 highlighted nickel’s surplus to attract battery investment.
  • Stainless steel firms may downplay nickel demand to negotiate lower input prices, reinforcing the “low price” narrative.
• Motive :
  • Undermining nickel sentiment strengthens their market position, especially in the EV battery race, where nickel’s 15% demand share in 2024 is critical.
• Evidence:
  • 2020-2022 saw lithium and cobalt producers gain investment as nickel prices soared (~$25,800), but 2023-2024 nickel rhetoric shifted focus back to alternatives .
    
    

4. Geopolitical Actors.

• Who They Are: Chinese state-linked entities, which back ~70% of Indonesia’s nickel processing, and policymakers aiming to dominate critical minerals.
• How They Gain:
  • Strategic Control: Depressed sentiment discourages Western nickel investment, solidifying China’s grip on supply chains. Indonesia’s ~50% supply share in 2024, up from <10% in 2005, aligns with China’s Belt and Road goals.
  • Economic Leverage: Lower prices weaken Western producers, enabling Chinese firms to acquire assets or influence global pricing, as seen in 2015-2019 when China expanded in Indonesia.
  • Battery Dominance: A bearish nickel outlook ensures cheap inputs for China’s EV battery industry, which leads globally.
• How They Contribute to the Rhetoric:
  • China doesn’t directly spread the rhetoric but fuels it through overproduction. 2021-2024 HPAL expansion, adding battery-grade nickel, intensified surplus fears, as noted in S&P Global reports.
  • Geopolitical framing in Western media amplified oversupply as a “China-driven glut,” indirectly serving China’s narrative of dominance.
• Motive:
  • Intentionally flooding the market depresses prices, undermining Western competitors and securing long-term control, even though this risks China’s own profits.
• Evidence:
  • China’s nickel investments grew post-2014 Indonesian ban, leading to 2024’s surplus. Similar tactics in rare earths (2010s) showed China’s willingness to manipulate sentiment for strategic gain.
  • 2023-2024, industry observers noted China’s role in “flooding” nickel, aligning with Western fears of Chinese control.

5. Media and Analysts Seeking Attention

• Who They Are:
  I won't mention any names but you know who they are.
  Financial media and consultancies producing market reports.
• How They Gain:
  • Audience Engagement: Sensational headlines like “Nickel Glut Crushes Prices” attract clicks and subscriptions, especially post-2022’s $100,000 volatility.
  • Consulting Revenue: Analyst firms benefit from heightened uncertainty, as miners and investors pay for detailed forecasts. Oversupply fears drive demand for reports.
• How They Contribute to the Rhetoric:
  • Media amplified the narrative with terms like “flood” and “collapse” in 2022-2024, focusing on Indonesia’s surge and price drops from ~$25,800 (2022) to ~$16,000 (2024).
  • Analyst reports from 2020-2024 forecast surpluses, labeling $16,000 as “low” versus 2020-2022, shaping industry perceptions without emphasizing the 20-year median (~$16,200).
• Motive:
  • Exaggeration isn’t necessarily intentional sabotage but a by-product of prioritizing attention over nuance. Highlighting a “crisis” generates more interest than noting $16,000 is historically normal.
• Evidence:
  • 2023-2024 articles, used dramatic language, echoing 2015-2019 when media hyped oversupply. Analyst reports predicted prolonged surpluses, amplifying bearishness.

Is It Sabotage?

The term “sabotage” implies deliberate intent, but the evidence suggests a mix of intentional and unintentional amplification:

• Intentional (Possible):
  • Low-Cost Producers: Indonesian/Chinese firms may overproduce to weaken competitors, this aligns with China’s history of flooding markets (e.g., steel, rare earths).
  • Short Sellers: Traders betting against nickel prices have a clear motive to spread pessimism .
  • Geopolitical Actors: China’s strategic interest in controlling nickel could involve tacit support for oversupply..
• Unintentional (Maybe):
  • Media/Analysts: Their exaggeration stems from commercial incentives (clicks, revenue), the 2022 LME volatility primed media for dramatic narratives.
  • Miners/Investors: High-cost producers amplify oversupply to justify losses or seek support or to explain performance.
• Market Dynamics: The 2024 surplus and price drop are real, driven by Indonesia’s supply and weak stainless steel demand ,the rhetoric reflects these facts but overstates their severity.

Why the Rhetoric Feels False

• Price Misalignment: $16,000 is near the 20-year median (~$16,200), exceeding 11 years (e.g., 2016: $8,600), yet framed as a crisis.
• Cyclical Oversight: The 2024 surplus (~200,000 tonnes) mirrors 2015-2019, which resolved by 2020-2022, but the rhetoric ignores this cycle.
• Demand Underplayed: Battery demand (15% in 2024, up from near-zero in 2005) is growing 20-30% annually, yet overshadowed by stainless steel weakness.

Who Gains Most?

• Primary Beneficiaries:
  • Indonesian/Chinese Producers: They gain market share, acquire assets cheaply, and secure long-term dominance as high-cost rivals falter. Their overproduction since 2018 directly fuels the surplus, intentionally or not.
  • Short Sellers: They profit directly from price drops, with 2023-2024 short positions on LME reflecting bearish bets.
• Secondary Beneficiaries:
  • Competing Sectors: Lithium/cobalt producers and stainless steel input suppliers benefit indirectly as nickel investment wanes.
  • Media/Analysts: They gain attention and revenue, amplifying the narrative for commercial reasons.
  • Geopolitical Actors: China’s strategic interests align with a weaker Western nickel sector .

Conclusion

The "low prices" and "oversupply" rhetoric, originating in 2018-2020 with Indonesia’s supply surge and solidified in 2023-2024 via analyst reports, media, and industry complaints, benefits several actors. Low-cost Indonesian/Chinese producers gain the most by consolidating market share and weakening high-cost rivals, potentially intentionally through overproduction. Short sellers profit from price drops, possibly amplifying pessimism. Competing sectors, media, analysts, and Chinese geopolitical interests gain indirectly by diverting investment, securing attention, or strengthening strategic positions, much stems from market realities (2024’s surplus) and commercial incentives—the exaggeration serves these beneficiaries by depressing sentiment beyond what the 20-year data ($16,000 near median, cyclical surpluses) justifies.

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