Recording date: 27 March 2024

Nickel continues to retrace gains – down to $16,600 – more than $1,000 bottom, but has given up about 2/3 of its move from the recent peak. Expect a range of $16,500-$17,500 for the next while.

A Tale of Two Markets in China

Nickel sulphate continued to climb – up another 3% this week. The “great conversion” that I discussed is continuing – discount coefficients of MHP and high nickel matte remained at high levels of 80-81% and 84-85% respectively and with nickel prices dropping this week will be interesting to see if these coefficients continue to climb higher (expect by end of the year for both to getting towards 90%).

Stainless on the other hand remains sloppy with inventories continuing to build and prices continuing to lower. Indonesia is working through a backlog of ore approvals which is causing some immediate market concerns about the supply squeeze of ore. 153 million tonnes of quota have been approved versus total production in 2023 of 194 million tonnes. Will need to see that number get up to 210 million tonnes this year.

NPI discounts contracted a little bit – will see what happens with discounts this week. Once matte gets back up towards 90% range, should see NPI discounts contract and complete “great convergence”.

As said last week, will need to see both markets improve before seeing the next leg higher and will see nickel consolidate in this range.

Company News

Last week, Talon Metals put out a nice hole of 12.72 meters (41.7 feet) of high-grade massive nickel and copper mineralization assaying 6.04% Ni and 2.68% Cu (7.5% NiEq) located 10 meters outside of the Tamarack Resource Area at a depth of 380.7 meters. An additional 25.26 meters (82.87 feet) of disseminated sulphides assaying at 0.695% Ni and 0.493% Cu (1.13% NiEq) starting at a depth of 435.6 meters. They said they had 4 rigs going so we should see more results over the coming weeks.

BHP cut 25% of the contractor workforce at the West Musgrave project as it slows spending in nickel space. This is the project they sold for $250K cash in 2014 + 2% royalty + $10 million production payment and bought back for ~$2 billion.

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