Today saw the release of the June23 Resources and Energy Quarterly from the Dept of Industry, Science & Resources:
https://www.industry.gov.au/publications/resources-and-energy-quarterly-june-2023The nickel section on p130-135 has some good, some bad:
- Surpluses are evident in Chinese markets, though Western markets remain tight.
- China’s electric vehicle (EV) sales have also been flat in recent months, following the cessation of generous government subsidies
(this has been superseded in late June, possibly after the report went for signoff.
https://electrek.co/2023/06/21/china-extends-ev-tax-exemption-through-2027-largest-tax-break/)
- Prices of battery packs are anticipated to fall from 2024, which should see the price gap between ICEVs and EVs narrow. This would increase demand for EVs, thereby supporting higher nickel consumption.
- The Indonesian government has stopped issuing new licences for NPI smelters, and is reviewing licences and tax incentives for matte producers. These changes have occurred due to concerns about the availability of nickel ore to sustain the industry’s rapid growth.
- Yes the nickel sulphate premium has disappeared, but is expected to improve over the outlook:
- The International Nickel Study Group forecasts the surplus in the nickel market to be equal to 7.1% of primary supply in 2023. Normally, this would put considerable downward pressure on prices, however LME prices have remained above US$20,000 a tonne.
- Underlying this anomaly is that the market surplus is almost wholly driven by Indonesian and Chinese Class II nickel products. Class I nickel markets remain tight, as indicated by further nickel outflows from LME warehouses. Inventories as at the end of May stood at 39,000 tonnes — nearly half the level prior to Russia’s invasion of Ukraine and the brief halt in LME trading in March 2022, and the lowest level recorded in the past decade (Figure 13.5).
- Nickel and cobalt exploration expenditure for the March quarter 2023 was $78 million. While this is down from the previous quarter, it is 21% higher than in the March quarter 2022. Further, exploration in the 12 months to March 2023 is also higher than at any point since 2008, highlighting nickel’s growing importance in the global energy transition.
There are I think two very positive things in there for QPM:
1. India’s metallurgical coal needs are expected to grow through the outlook period, as long-term investments in new steel production start to pay off (p50)
> This should support Bowen Basin met coal miners, and their use of the Moranbah Gas Project, through the
2. Safeguard Mechanism reforms commenced on July 1, 2023 (p7)
> Not sure how much of the ACCU QPME would qualify for. Appreciate some input here.
Remember, the AFS indicated monetising carbon credits was still being assessed, and they'd allocated a nominal $20/t value.
IMO, read carefully and on balance, the report shines a positive light on QPM.
(20min delay)
