Nickel short position reduced but not yet delivered?
Nickel short position reduced but not yet delivered?

16 May 2022 – The Tsingshan Group is said to have halved its Nickel short positions. However, deliveries have reportedly not yet arrived at any London Metal Exchange (LME) warehouse. Indonesian government confirms nickel reserves will run out from 2031. And Europe is struggling with steel shortages and buyers are looking for new suppliers.

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Short position reduced, but not yet delivered

After Tsingshan’s speculation drove prices above $100,000 per tonne in March 2022, bringing the global nickel market to a standstill, the group now seems to be slowly managing to reduce its huge short position of 150,000 tonnes of nickel.

Group still heavily burdened

According to current estimates, however, more than 60,000 tonnes of nickel are still weighing heavily on Tsingshan’s cash flow. In addition, the group has to buy a lot of nickel from external suppliers, as it hardly produces any of the high-grade traded on the London Metal Exchange itself.

No delivery has arrived at the LME warehouses?

The question that many traders must be asking themselves is whether the Chinese company and its trader Big Short are not just trying to get the nickel prices down to a level that could finally drive them into insolvency by means of appropriate press releases and information to the media.

So far, no deliveries of the allegedly mined 90,000 tonnes from the short position have been made to the LME warehouses.

Indonesia to run out of important nickel deposits by 2031

Indonesian Director General of Mineral and Coal at the Ministry of Energy and Mineral Resources Ridwan Djamaluddin said in an official statement last week that the country could run out of key saprolite ores containing more than 1.7% Ni by 2031.

By 2036, the reserves could be stretched if the industry also processed ore with a Ni content of 1.5% and more. With this, the Indonesian government now also confirms that the all-important global nickel deposits, which are crucial for the green transformation, will run out before 2040.

We had already pointed out in a comprehensive analysis at the end of April that nickel deposits are likely to run out in the first producer countries as early as 2030, i.e. in less than eight years.

In less than eight years, the Philippines will run out of nickel. Already in 2030, with the current Philippine production quantities and necessary increase quotas, no more nickel can be mined from currently known deposits due to the increasing demand. Deposits in Canada will run out as early as 2032. In 2034 in the United States. China’s turn comes in 2035, followed by Indonesia in 2036. And in 2039, Russia will also run out of nickel.

Out of Nickel: Unnoticed, the raw material runs out, 26 April 2022

Europe struggles with steel shortage

Until the Ukraine crisis, many European steel producers sourced key inputs, such as raw materials and slabs, from Ukraine and Russia. The war between the two countries has put an almost abrupt end to this.

Supply chains destroyed by war

Even though the EU has eased imports from Ukraine, buyers still face major challenges, especially logistical ones. Large steel producers, such as Marcegaglia in Italy, sourced 60-70% of their slabs from Ukraine and now face the shambles of their supply chains.

Buyers must look for alternatives

This means that steel and raw material buyers have to rethink, since an improvement of the supply situation from Ukraine and especially from Russia is not to be expected for the time being. At present, it can be assumed that Russia will not be a steel supplier for years to come due to European and global sanctions.

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