Review of "Norilsk Nickel" the market of metals: Nickel, platinum and palladium
PJSC "MMC "Norilsk Nickel", the world's largest producer of palladium and refined Nickel, as well as one of the largest producers of platinum and copper is the fourth review of markets for Nickel and platinum group metals (PGMs), prepared by experts of "Norilsk Nickel" ICBC and Standard Bank based on fundamental analysis of global economic and industry data.
"We see a growing demand for high quality Nickel to the European consumers, which caused commodity restructuring among steel producers in Europe," said Anton Berlin, the Director of the marketing Department of Norilsk Nickel. We have also seen an increase in demand for metal from manufacturers of batteries for the automotive industry and maintain its long-term forecast for the global structural deficit in the Nickel market after 2020".
Nickel
Experts have paid considerable attention to the stainless steel market, whose share in the structure of the global consumption accounted for more than 70% Nickel. The year was marked by large-scale trade wars, which led to changes in both local and foreign markets.
Market in the Asia-Pacific region has become a key for the production and consumption of Nickel. Aggressive growth in production of stainless steel in Indonesia has caused the protective action of the PRC in the form of import duties on this product. This forced the Indonesian producers to seek other markets in the region and focus efforts on the production of Nickel pig iron (NPI) for export to China.
Dumping policy from Asian steel producers, protectionist measures by the US force, in turn, local players to take protective measures against the import of stainless steel and provokes a full-scale restructuring at the local market. In particular, the reduction in the cost of scrap in Europe appeared an additional incentive for the substitution of crude ferro-Nickel. The growth of processing scrap, in turn, is positive for "Norilsk Nickel" (leader in the production of high-grade Nickel, 50% of the supply of non-ferrous and precious metals of which falls on the European markets).
Experts of "Norilsk Nickel" note the continuing growth in demand from battery manufacturers and, thus, point to the lack of confidence that the announced plans to increase capacity for the production of crude ferro-Nickel in Indonesia will be able in the future to meet the growing demand. Intrigue makes the decision of the authorities of Indonesia on early ban on the export of Nickel ore, which in turn adds to market volatility.
Expert command of "Norilsk Nickel" refers to 2020 as a turning point. In the near future, the existing balance on the market radically will not change. Its conservation will contribute to the current growth in the production of crude ferro-Nickel in Indonesia; increase in the supply of Nickel ore from the Philippines, New Caledonia and Guatemala. However, after 2020 with high probability the market will face a structural deficit.
Palladium
Experts of "Norilsk Nickel" predict excess consumption of palladium over production until 2025. This is due, primarily, with the increase of the amount of metal used in the catalysts of cars with internal combustion engines, including hybrids. The laws on exhaust emissions are subject to stricter every year, especially in populous countries such as China, India, USA and EU members. However, the palladium deficit was somewhat reduced in this year due to the release of refined metal inventories from the accumulated manufacturers South Africa last year.
the following year, a deficit of palladium will increase in connection with the gradual recovery of automobile production. It is expected that this will happen through the measures of the state support of sales of cars in China, as well as the efforts of manufacturers to comply with new legislative requirements.
long-term projected need for significant additional production of palladium, which can be achieved through the construction of new projects of its key participants and processing of secondary raw materials.
Platinum
platinum supply was restored this year after last year's fall, due to growing production in South Africa. Most of the mines were profitable due to the weakening of the local currency and the absence of any significant effect of strikes on production volumes of metal. Industrial demand weakened in connection with the decreasing market of cars with diesel engines in Europe and India, as well as the overall drop in sales of cars in the world. The use of platinum in the jewelry sector also declined this year, mainly due to a sharp fall in demand in China, due to changes in the investment preferences and volatility of China's economic growth.
the Surplus in the platinum market amounted to 741 thousand ounces. But thanks to the increase in investment demand to 1.4 million ounces, primarily on the replenishment of the ETF by more than 1 million ounces instead of fleeing in 2018, the aggregate balance fell into deficit for the first time in 2016 and built -543 thousand ounces.
next year is projected to decrease overproduction of platinum and decline of the surplus to 543 million ounces. If the demand from investors will remain strong, the market can achieve balance or even go into a deficit. The narrowing surplus also contribute to the efforts of manufacturers of diesel cars to meet new environmental requirements.