Nordic Nickel Restricted (ASX: NNL) – Buying and selling Halt

Nickel Value Replace: Q1 2024 in Assessment

At first of the yr, specialists have been predicting that nickel costs can be rangebound in 2024.

With the primary quarter within the books, that story appears to largely be enjoying out. After opening the yr at US$16,600 per metric ton (MT) on January 2, nickel was steady throughout January and February. Nonetheless, March introduced volatility to the sector, with robust good points pushing the bottom steel to a quarterly excessive of US$18,165 on March 13.

Nickel’s worth rise failed to carry, and it as soon as once more dropped under the US$17,000 mark by the tip of the month. Finally, the steel fell to US$16,565 on March 28, leading to a slight loss for the quarter.

Indonesian provide dampens nickel costs

Lackluster pricing within the nickel market is basically the results of the steel’s ongoing oversupply place.

The most important issue is elevated manufacturing from Indonesia, which is the highest producer of the steel by far. The nation produced 1.8 million MT of nickel in 2023, in keeping with the US Geological Survey, representing half of worldwide provide.

Indonesia’s output has climbed exponentially over the previous decade, and has been exacerbated by authorities initiatives that positioned strict limits on the export of uncooked supplies to encourage funding in manufacturing and refinement.

In an e mail to the Investing Information Community (INN), Exploration Insights Editor Joe Mazumdar wrote, “The expansion in electrical automobile (EV) manufacturing and the escalating demand for nickel in batteries prompted the Indonesian authorities to mandate elevated native refining and manufacturing capability from firms working within the nation.”

Regardless of the decrease high quality of fabric coming from Indonesia, the funding was made to shore up provide strains for Chinese language battery makers and was earmarked for EV manufacturing. Nonetheless, EV demand has waned by means of 2023 and into 2024 attributable to excessive rates of interest, vary nervousness and charging capability, growing nickel stockpiles.

A report on the nickel market offered by Jason Sappor, senior analyst with the metals and mining analysis staff at S&P International Commodity Insights, exhibits that brief positions started to build up by means of February and early March on hypothesis that Indonesian producers have been reducing working charges attributable to a scarcity of uncooked materials from mines.

The dearth of mined nickel, which helped push costs up, was brought on by delays from a brand new authorities approval course of for mining output quotas that was applied by Indonesia in September 2023. The brand new system will enable mining firms to use for approvals each three years as a substitute of yearly. Nonetheless, the implementation has been gradual, and confronted additional delays whereas the nation went by means of normal elections.

The nickel market discovered extra help on hypothesis that the US authorities was eyeing sanctions on nickel provide out of Russia. Base metals have been in the end not included within the late February sanctions, and costs for the steel started to say no by means of the tip of March as Indonesian quota approvals accelerated.

Western nickel producers lower output on low costs

In line with Macquarie Capital information offered by Mazumdar, 35 % of nickel manufacturing is unprofitable at costs under US$18,000, with that quantity leaping to 75 % on the US$15,000 degree.

Mazumdar indicated that nickel pricing challenges have led to cuts from Australian producers like First Quantum Minerals (TSX:FM,OTC Pink:FQVLF) and Wyloo Metals, which each introduced the suspension of their respective Ravensthorpe and Kambalda nickel-mining operations. Moreover, main Australian nickel producer BHP (ASX:BHP,NYSE:BHP,LSE:BHP) is contemplating cuts of its personal.

Nickel worth, Q1 2024.

Chart by way of the London Steel Alternate.

In the meantime, the nickel trade in French territory New Caledonia is going through extreme difficulties attributable to faltering costs.

The French authorities has been in talks with Glencore (LSE:GLEN,OTC Pink:GLCNF), Eramet (EPA:ERA) and uncooked supplies dealer Trafigura, which have vital stakes in nickel producers within the nation, and has supplied a 200 million euro bailout bundle for the nation’s nickel trade. The French authorities set a March 28 deadline for New Caledonia to conform to its rescue bundle, however a choice had not but been reached as of April 11.

Earlier this yr, Glencore introduced plans to shutter and seek for a purchaser for its New Caledonia-based Koniambo Nickel operation, which it mentioned has but to show a revenue and is unsustainable even with authorities help.

For its half, Trafigura has declined to contribute bailout capital for its 19 % stake in Prony Sources Nouvelle-Caledonie and its Goro mine within the territory, which is forcing Prony to discover a new investor earlier than will probably be capable of safe authorities funding. On April 10, Eramet reached its personal deal with France for its subsidiary SLN’s nickel operations in New Caledonia; the transaction will see the corporate lengthen monetary ensures to SLN.

The state of affairs has exacerbated tensions over New Caledonia’s independence from France, with opponents of the settlement arguing it dangers the territory’s sovereignty and that the mining firms aren’t contributing sufficient to bailing out the mines, which make use of 1000’s. Studies on April 10 point out that protests have turned violent.

Whereas cuts from Australian and New Caledonian miners aren’t anticipated to shift the market away from its surplus place, Mazumdar expects it can assist to take care of some worth stability out there.

“The newest forecast tasks demand (7 % CAGR) will develop at a slower tempo than provide (8 % CAGR) over the following a number of years, which ought to generate extra market surpluses,” he mentioned.

Miners search “inexperienced nickel” premium for western merchandise

In an e mail to INN, Ewa Manthey, commodities strategist at monetary providers supplier ING, advised western nickel producers are in a difficult place, at the same time as they make cuts to manufacturing.

“The latest provide curtailments additionally restrict the availability options to the dominance of Indonesia, the place the vast majority of manufacturing is backed by Chinese language funding. This comes at a time when the US and the EU need to scale back their dependence on third nations to entry crucial uncooked supplies, together with nickel,” she mentioned.

This was affirmed by Mazumdar, who mentioned the US is working to fight the state of affairs by means of a collection of subsidies designed to encourage western producers and assist within the growth of recent crucial minerals tasks.

“The US Inflation Discount Act promotes by way of subsidies sourcing of crucial minerals and EV components from nations with which it has a free commerce settlement or a bilateral settlement. Indonesia and China should not have free commerce agreements with the US,” he mentioned. Mazumdar went on to counsel that the most important benefactors of this plan might be Australia and Canada, however famous that with costs remaining depressed, multibillion-dollar tasks will battle to get off the bottom.

Western producer shope their materials might finally see a “inexperienced nickel” premium that performs into their give attention to ESG. Nonetheless, this concept hasn’t gained a lot traction. The London Steel Alternate (LME) believes the inexperienced nickel market is just too small to warrant its personal futures contract, and Mazumdar mentioned a lot the identical. “There’s little proof {that a} premium for ‘inexperienced nickel’ producers or builders has a lot momentum, though an operation with low carbon emissions might have a greater likelihood of getting funding from institutional traders in western nations,” he famous.

Regardless that there may not be a lot curiosity in inexperienced nickel on the LME, there are vocal proponents, together with Wyloo’s CEO, Luca Giacovazzi. He sees the premium as being important for the trade, and has mentioned contributors must be on the lookout for a brand new market if the LME is unwilling to pursue a separate itemizing for inexperienced nickel.

The requires a premium have largely come from western producers that incur larger labor and manufacturing prices to fulfill ESG initiatives, which is occurring much less amongst their counterparts in China, Indonesia and Russia.

Western producers have been caught off guard early in March as PT CNGR Ding Xing New Power, a three way partnership between China’s CNGR Superior Materials (SHA:300919) and Indonesia’s Rigqueza Worldwide, utilized to be listed as a “good supply model” on the LME. The designation would enable the corporate, which produces Class 1 nickel, to be acknowledged as assembly accountable sourcing pointers set by the LME.

Whether it is permitted, which is taken into account doubtless, the corporate can be the primary Indonesian agency to be represented on the LME. There was pushback from western miners on the premise of ESG and accountable resourcing challenges.

Investor takeaway

Because the nickel market faces robust manufacturing from Indonesia, specialists count on extra of the identical for costs.

“Trying forward, we consider nickel costs are more likely to stay below stress, no less than within the close to time period, amid a weak macro image and a sustained market surplus,” Manthey mentioned. The continued surplus might present some alternatives for traders trying to get right into a crucial minerals play at a decrease value, however a reversal might take a while.

Don’t overlook to comply with us @INN_Resource for real-time information updates!

Securities Disclosure: I, Dean Belder, maintain no direct funding curiosity in any firm talked about on this article.

Editorial Disclosure: The Investing Information Community doesn’t assure the accuracy or thoroughness of the knowledge reported within the interviews it conducts. The opinions expressed in these interviews don’t mirror the opinions of the Investing Information Community and don’t represent funding recommendation. All readers are inspired to carry out their very own due diligence.

Further info on Nickel shares investing — FREE

Nickel Value Replace: Q2 2024 in Assessment

The primary quarter of the yr noticed the nickel worth below menace from a market glut as Indonesian provide flooded the market, forcing western producers to start reducing manufacturing amid low profitability.

March introduced quite a lot of volatility, with nickel breaking by means of the US$18,000 per metric ton (MT) mark; nonetheless, by April 1 the bottom steel had as soon as once more slumped, opening the second quarter at US$16,568.

As Q2 progressed, commodities noticed broad good points and nickel hit a year-to-date excessive of US$21,615 on Could 20.

After reaching that top level, nickel could not discover help and fell quickly to shut the second quarter at US$17,291. Since then, the value of nickel has continued to say no, approaching yearly lows of US$16,090 on July 30.

Nickel costs, April 1 to August 8, 2024.

Chart by way of Buying and selling Economics.

Russian nickel faces western sanctions

Throughout Q1, nickel costs have been negatively affected as Indonesian producers continued to flood the market; nonetheless, the bottom steel started seeing optimistic momentum because the nation skilled delays in approving mining output quotas, and amid hypothesis that Russian nickel could possibly be sanctioned by the US and UK.

Finally, nickel wasn’t sanctioned by these nations on the time, and as mining quotas started to work their approach by means of Indonesian pink tape, nickel costs as soon as once more skilled declines.

Nonetheless, momentum started to shift once more for nickel firstly of Q2. On April 12, information broke that Washington and London had banned US and UK steel exchanges from admitting new aluminum, copper and nickel from Russia. Taking rapid impact, the prohibitions additionally halted the import of these metals.

In July, the London Steel Alternate prolonged buying and selling sanctions to Russian miner Norlisk Nickel’s Finnish operations for the buying and selling of briquettes and cathodes; these restrictions are set to come back into impact in October.

Joe Mazumdar, editor of Exploration Insights, advised this transfer could have little influence on the sector.

“That nickel continues to be going to make it into the market, it’s simply going to go to a unique trade, most likely Shanghai … So I may nonetheless see that nickel transferring and getting consumed within the international market — it’s simply not coming to the west,” he defined to the Investing Information Community in an interview.

Nickel continued to climb by means of April and Could as a mix of things drove metals costs extra broadly. Dovish statements from the US Federal Reserve helped present momentum, as did cooling inflation information.

Finally nickel costs fell again, with London Steel Alternate stockpiles of the steel growing by means of the second quarter, rising from 77,604 MT on April 1 to 95,436 MT on June 28.

Western nickel producers lower output amid low costs

The overhang within the nickel market induced producers to start curbing their manufacturing within the early a part of the yr. This pattern continued into the second quarter as extra producers began to gradual output or shut mines altogether.

Among the many hardest-hit areas within the newest spherical of closures has been Australia, the place low costs and excessive working prices compelled First Quantum Minerals (TSX:FM,OTC Pink:FQVLF) to position its Ravensthorpe operations on care and upkeep on the finish of April. The mine had been working at decrease capability by means of the beginning of the yr because it labored by means of aboveground stockpiles and used a lower-cost atmospheric leach circuit to course of ore.

BHP (ASX:BHP,NYSE:BHP,LSE:BHP), which had been contemplating cuts earlier within the yr, introduced on July 11 that it could be suspending operations at its Nickel West operations and West Musgrave mission.

In its announcement, it cites oversupply within the international nickel market and signifies consensus that nickel costs might be decrease over the following half-decade attributable to progress in different, low-cost provide. BHP mentioned it could start transitioning its operations beginning instantly, with the total suspension being accomplished between October and December of this yr. The corporate notes that the closure is non permanent and mentioned it can overview its choice in February 2027.

Mazumdar defined that Indonesia has a aggressive benefit, however as extra operations start to chop manufacturing it can begin to eat into the market surplus, which might be a optimistic for the nickel market.

“They will’t compete on a price foundation with Indonesia, no one can. So Indonesia continues to oversupply the market, and now there’s an overhang. What occurs is when you get these manufacturing cuts, there’s much less provide out there after which that overhang will recede. That’s the very best factor that may occur to the nickel market,” he mentioned.

Can authorities incentives increase western nickel output?

Amid these challenges, the US has arrange numerous applications, together with tax credit by means of the Inflation Discount Act (IRA), to bolster home and allied manufacturing of nickel and different crucial minerals.

The IRA was introduced in 2022, however extra lately, the Biden administration licensed the US Division of Power’s Clear Power Financing Program, which establishes a US$72 billion fund that might be used to supply assured loans to “tasks that improve the domestically produced provide of crucial minerals.”

Mazumdar doesn’t assume incentives like this might be sufficient to get new tasks into the nickel area.

“The west can supply low cost loans to get individuals to construct it, however they’re not going to make any cash to pay again the mortgage regardless of how low cost it’s except they offer them a grant,” he mentioned.

He defined that to get these tasks off the bottom, the nickel worth would want to go larger to incentivize growth, or governments would want to supply a assured worth to purchase the nickel and construct their very own stockpiles.

Again-and-forth pressures between authorities initiatives and Chinese language dominance have created a bifurcated market and left Indonesia with few choices to diversify its exports, even because it negotiates a commerce partnership with the US.

This has led to makes an attempt from Indonesia to restructure funding offers with Chinese language companies that may enable Indonesian nickel merchandise to qualify for incentives below the IRA.

What elements are driving nickel demand?

Regardless of the nickel market’s oversupply, there’s nonetheless excessive demand, a lot of it from China.

China is the biggest client of nickel on the earth, accounting for round 65 % of whole consumption, with the majority of it destined for metal merchandise. Nonetheless, as China’s actual property market has stalled out, so too has demand for metal merchandise, with consumption slumping 3.3 % in the course of the first half of the yr.

Complete 2024 consumption is projected to fall to round 900 million MT, down from 933.4 million MT in 2023.

Regardless of the decline, nickel demand has been bolstered by growing gross sales of battery electrical autos (BEVs) in recent times. Regardless that experiences indicated that demand for BEVs had waned firstly of 2024, progress within the section has remained resilient, with BEVs’ international share of the sunshine automobile market anticipated to achieve 19.2 % in 2024.

In China, the uptake has additionally been huge, with gross sales from Chinese language BEV producer BYD (OTC Pink:BYDDF,SZSE:002594) projected to exceed these of North American rival Tesla (NASDAQ:TSLA) in 2024.

Moreover, demand for hybrid autos is anticipated to exceed demand for conventional inner combustion engine (ICE) vehicles. Whereas batteries for hybrids aren’t as massive, they nonetheless use extra nickel than ICE autos.

The quantity of nickel utilized in batteries has been growing in recent times as customers demand better vary. BEVs use 25.3 kilograms of nickel on common, whereas hybrids use a median of 6.5 kilograms.

What’s going to occur to the nickel worth in 2024?

Whereas manufacturing cuts ought to convey the market extra into steadiness, the nickel worth is more likely to be decided by provide coming from Indonesia and demand from Chinese language metal and battery manufacturing.

Regardless that governments have created initiatives to stimulate western manufacturing, they’re not more likely to have a lot skill to extend mining operations so long as nickel costs stay depressed.

As pricing for nickel bottoms out, there could also be alternatives for traders who’re keen to be affected person; nonetheless, it could possibly be a while earlier than costs rebound sufficiently for miners to start restarting their operations.

Lengthy-term predictions present nickel within the US$17,000 vary for 2024, slowly bettering to US$23,000 degree in 2028.

Don’t overlook to comply with us @INN_Resource for real-time information updates!

Securities Disclosure: I, Dean Belder, maintain no direct funding curiosity in any firm talked about on this article.

Editorial Disclosure: The Investing Information Community doesn’t assure the accuracy or thoroughness of the knowledge reported within the interviews it conducts. The opinions expressed in these interviews don’t mirror the opinions of the Investing Information Community and don’t represent funding recommendation. All readers are inspired to carry out their very own due diligence.

Further info on Nickel shares investing — FREE

High 3 Canadian Nickel Shares of 2024

After trending down in 2023, nickel costs climbed to a ten month excessive in late Could; nonetheless, they’ve since pulled again. Whereas this setting has been powerful for nickel firms, some shares are nonetheless thriving.

Provide is anticipated to outflank demand over the brief time period, however the longer-term outlook for the steel is robust. Demand from the electrical automobile trade is one cause nickel’s future seems to be vivid additional into the long run.

“International nickel consumption is anticipated to extend attributable to restoration of the stainless-steel sector and elevated utilization of nickel in electrical automobile batteries. Batteries now account for nearly 17 % of whole nickel demand, behind stainless-steel,” Ewa Manthey, commodities strategist at monetary providers agency ING, mentioned within the lead-up to 2024.

“The steel’s attraction to traders as a key inexperienced steel will help larger costs in the long term.”

As for Canada’s nickel market, the crucial steel is listed as one of many high priorities within the Canadian authorities’s Crucial Minerals Technique, which was introduced in 2023. The nation is the world’s fifth largest producer of nickel, with a lot of its manufacturing coming from mines in Ontario’s Sudbury Basin, together with Vale’s (NYSE:VALE) Sudbury operation and Glencore’s (LSE:GLEN,OTC Pink:GLCNF) Sudbury Built-in Nickel Operations.

In February, Canada Nickel Firm (TSXV:CNC,OTCQX:CNIKF) introduced its subsidiary NetZero Metals is planning to develop a US$1 billion nickel processing plant in Ontario that may turn into North America’s largest as soon as full.

How are Canadian nickel shares performing in 2024? Under are the highest nickel shares in Canada on the TSXV and CSE by share worth efficiency thus far this yr. TSX shares have been thought of, however did not make the lower.

All year-to-date and share worth information was obtained on July 30, 2024, utilizing TradingView’s inventory screener. The highest nickel shares listed had market caps above C$10 million at the moment.

1. Class 1 Nickel and Applied sciences (CSE:NICO)

Firm Profile

Yr-to-date achieve: 233.33 %; market cap: C$32.66 million; share worth: C$0.20

Class 1 Nickel and Applied sciences’ flagship property is its Alexo-Dundonald nickel mission close to Timmins, Ontario. The past-producing asset hosts 4 nickel sulfide deposits. The corporate’s pipeline additionally consists of the past-producing Somanike nickel-copper mission close to Val-d’Or, Québec, and the River Valley platinum-group metals mission close to Sudbury, Ontario.

Class 1 Nickel launched useful resource estimate updates for the Alexo South and Alexo North deposits in April and Could of this yr, respectively. The corporate mentioned it expects to begin work on a preliminary financial evaluation for Alexo-Dundonald within the close to time period as a part of its plan to convey the asset again into manufacturing.

The Canadian nickel exploration firm’s share worth began off the yr at C$0.06, and it started climbing in April to achieve a year-to-date excessive of C$0.21 on July 26.

2. Energy Nickel (TSXV:PNPN)

Firm Profile

Yr-to-date achieve: 158.33 %; market cap: C$119.22 million; share worth: C$0.62

Energy Nickel is creating its 80 % owned Nisk polymetallic property in Québec, which hosts nickel, copper, platinum and palladium mineralization. In line with the corporate, it plans to create Canada’s first carbon-neutral nickel mine. The polymetallic nature of the mission is a plus for the financial case for future nickel manufacturing in a low worth setting.

This ongoing work has generated optimistic information movement for the corporate thus far in 2024. After beginning the yr at C$0.24, Energy Nickel started gaining in mid-April following two key bulletins. First got here drill outcomes from the newly found Lion zone 5 kilometers northeast of the principle Nisk deposit. Shortly after, the corporate introduced the completion of its choice to earn an 80 % stake in Nisk from Crucial Components Lithium (TSXV:CRE,OTCQX:CRECF).

Energy Nickel’s share worth jumped greater than 15 % on Could 10 to achieve C$0.64 following information that drilling continued to increase the high-grade, near-surface Lion discovery, with notable assays together with 14.42 meters at 0.59 grams per metric ton (g/t) gold, 69.14 g/t silver, 8.17 % copper, 6.25 g/t palladium, 8.44 g/t platinum and 0.58 % nickel.

In June, Energy Nickel commenced an 8,000 meter summer season drill program at Nisk, and closed a flow-through providing for gross proceeds of over C$20 million. Among the largest names in mining — Robert Friedland and Rob McEwen — participated. The corporate continued to climb earlier than peaking at a year-to-date excessive of C$0.88 on June 21.

3. EV Nickel (TSXV:EVNI)

Firm Profile

Yr-to-date achieve: 83.33 %; market cap: C$48.01 million; share worth: C$0.55

EV Nickel’s main mission is the 30,000 hectare Shaw Dome asset close to Timmins, Ontario. The property consists of the high-grade W4 deposit, which has a useful resource of two million metric tons at 0.98 % nickel for 43.3 million kilos of Class 1 nickel throughout the measured, indicated and inferred classes.

Shaw Dome additionally holds the large-scale CarLang A zone, which has a useful resource of 1 billion metric tons at 0.24 % nickel for five.3 billion kilos of Class 1 nickel throughout the indicated and inferred classes.

EV Nickel is engaged on integrating carbon seize and storage know-how for large-scale clear nickel manufacturing, and has procured funding from the Canadian authorities and Ontario’s provincial authorities. In late 2023, the corporate introduced it was transferring its carbon seize analysis and growth to the pilot plant stage.

The corporate’s information thus far in 2024 consists of the closure of a flow-through financing in March that in the end noticed EV Nickel elevate C$5.12 million to fund the event of its high-grade, large-scale nickel sources.

In April, EV Nickel launched its 2024 exploration program, which is geared toward advancing the CarLang pattern and exploring different nickel targets. The most up-to-date information out of this system got here in mid-June with the announcement that diamond drilling on the Langmuir 2 high-priority nickel goal had commenced, and plans have been in place to start drilling on high-grade nickel targets contained inside the Shaw Dome mission beginning in mid-June.

The Canadian nickel exploration firm’s share worth began off the yr at C$0.30 earlier than steadily climbing to achieve a year-to-date excessive of C$0.79 on Could 17.

Don’t overlook to comply with us @INN_Resource for real-time information updates!

Securities Disclosure: I, Melissa Pistilli, maintain no direct funding curiosity in any firm talked about on this article.

Editorial Disclosure: Canada Nickel Firm is a consumer of the Investing Information Community. This text will not be paid-for content material.

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