Battery Metal Bulls Fear China’s Big Disrupter to Hit Nickel – by Mark Burton and Jack Farchy (Bloomberg News – October 28, 2018)

Commodity traders expect nickel, the silvery-white metal used to make stainless steel, to be a winner from the electric-vehicle revolution — it’s a key component of batteries.

But a Chinese metals giant with a knack of upending markets is threatening to spoil the party. Tsingshan Holding Group announced last month it’s building an Indonesian plant to produce nickel-cobalt salts for the battery market.

Transforming the Southeast Asian nation’s low-grade deposits into “class 1” metal — the equivalent of turning cheap table wine into a prized vintage — would disrupt the bullish narrative that’s helped shield nickel from a broader selloff in metal markets this year.

Despite the challenges — adapting technology previously considered uneconomic — analysts are already moderating their price projections, mindful of Tsingshan’s record as a nickel market disrupter.

“The general fear is that if they can make it work, the nickel price won’t really need to go much higher,” said Colin Hamilton, managing director for commodities research at BMO Capital Markets Ltd., who estimates that a price of $14,000 a metric ton could justify further investment in such Indonesian projects. “If it wasn’t Tsingshan doing it, people would be discounting it a lot more heavily.”

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