The conflict between Russia and Ukraine heats up, and the global price of nickel products for power battery raw materials may rise

The recent escalation of the conflict between Russia and Ukraine, in addition to the surge in natural gas and crude oil, may also impact the supply of non-ferrous metals such as aluminum, nickel and copper. According to TrendForce, nickel is a key upstream raw material for electric vehicle power battery manufacturing, mainly manufacturing ternary cathode materials. In 2021, the global nickel mine production will be about 2.7 million metal tons. The main producing countries are Indonesia, the Philippines and Russia. The total output is about 9% (including low, medium and high grade), ranking third.

At present, the penetration rate of the new energy vehicle market is accelerating, and ternary power batteries account for nearly half of the market share, which means that the demand for nickel, the upstream raw material for automotive power batteries, will become stronger. The continued deterioration may affect the global nickel supply in the short term, push up nickel prices, and further increase the cost pressure on terminals such as the electric vehicle industry.

TrendForce said that in the medium to long term, most of the new nickel ore smelting and processing projects in recent years are located in Indonesia and other places. In 2021, Indonesia’s nickel ore production will account for about 37% of the world’s total production. Half a year will improve nickel supply and demand. TrendForce specifically mentioned that Indonesia’s export ban on mining last year only prohibited the export of raw ore, but did not prohibit Chinese companies such as Huayou Cobalt, Tsingshan Group, Ningbo Liqin, and GEM from investing in Indonesia to build nickel ore processing and smelting projects. The smelting of raw ores into concentrates, as well as further processed products, are not affected by the export ban.

From the perspective of the supply situation of manufacturers, the top five large nickel ore manufacturers in the world, the Russian industry Norilsk, supplies about 9% of the world’s nickel raw materials, and the production and processing of nickel ore is located in Russia, accounting for about 90% of Russia’s overall output, and the output of high-grade nickel is It accounts for 22% of the world’s total (according to nickel content, it can be divided into high-grade nickel, medium-grade nickel and low-grade nickel, high-grade nickel refers to Ni content ≥ 10%), ranking first in the world. This is followed by China’s Jinchuan with 17%, Switzerland’s Glencore with 13%, and Brazil’s Vale with 12%. TrendForce believes that, according to the conflict situation between Russia and Ukraine, if Europe and the United States impose sanctions on Russia, due to the high concentration of production and processing in Norilsk, it may cause a change in the flow of Russian nickel, that is, the Russian nickel that originally flowed into Europe and the United States may flow into China in large quantities, so the sanctions will lead to a change in the flow of nickel in Russia. Market share decline is less likely.

TrendForce said that at present, high-nickel-based ternary cathode materials (mainly referring to ternary materials with high nickel content such as NCM622, NCM811, and NCA) have the advantages of higher energy density and less precious metal cobalt raw materials. The market share of cathode materials has increased rapidly, from 10% in 2019 to nearly 40% in 2021. The development of high nickelization means that the consumption demand for nickel per ton of ternary cathode materials increases. With the accelerated penetration rate of new energy vehicles in China, Europe and the United States, the market demand for power lithium batteries is strong, and the overall nickel inventory continues to decline. Currently, global refining Only 100,000 tons of nickel stockpiles remain. Under the tight supply and demand, the spot market price of electrolytic nickel in China will reach 130,000 to 150,000 yuan per ton in 2021, and it will rise to 160,000 to 170,000 yuan per ton in early 2022. 10,000 RMB, the possibility of continuous rise cannot be ruled out.

White House reveals IC inventory has only 5 days left, warns of buying advanced chips from Taiwan

The U.S. Department of Commerce has warned that some U.S. companies may be forced to temporarily shut down and put their employees on unpaid leave as global manufacturers have only five days left in their wafer inventories.

The Financial Times, The Verge and the Washington Post reported that the Commerce Department surveyed about 150 companies around the world, showing that manufacturers will have a median of only 5 days of wafer inventory left at the end of 2021, much lower than the 40 days in 2019.

Commerce Secretary Gina Raimondo warned at a press conference on the 25th that the U.S. is vulnerable to a fragile supply chain, and that even with only minor disruptions, some U.S. companies could face temporary closures and employees forced to take unpaid leave.

Let me show you how fragile the supply chain is,” said Raimondo. …… There are only five days of wafer inventory left, and there is no room for error. What does that mean? Whether it’s an epidemic, a hurricane, a natural disaster, political instability or equipment failure, if there’s a plant around the world that’s disrupted, the impact will be felt in the United States.

This underscores the extent to which the U.S. relies on overseas chip makers, such as TSMC. We buy almost all of our advanced semiconductor chips from Taiwan, which are needed for sophisticated military equipment,” said Raimondo, adding that “U.S. domestic production of advanced semiconductor chips is zero.

Raimondo called on Congress to pass the Chips for America Act, which would unlock a $52 billion grant program to encourage U.S. domestic chip manufacturing activity. Although the bill has passed the Senate, it has stalled in the House.

According to a Commerce Department survey, the median demand for chips from surveyed manufacturers in 2021 is 17 percent more than in 2019. The shortage is particularly acute in traditional process-based and automotive industries. Respondents predict that the shortage of wafers will be difficult to resolve in the next six months.

According to the Commerce Department’s report, the types of chips most affected include traditional logic ICs (medical devices, automobiles and other products), analog ICs (power management, image sensors, radio frequency, etc.) and optoelectronic ICs (sensors and switches).

The report points out that the affected chips are not necessarily the most advanced process, but rather the 40-800nm process chips are facing a “serious semiconductor supply and demand imbalance”. The report said the main bottleneck appears to be silicon wafer capacity, which requires a long-term solution.

Reuters quoted a congressional aide as saying that U.S. House leaders later on the 25th unveiled a bill to enhance competitiveness with China, which would also raise the federal government’s budget for semiconductor spending.

Germany criticized for over-reliance on Russian gas for refusing military aid to Ukraine

CNN reported on January 23 that Ukrainian Defense Minister Oleksii Reznikov posted on social media that the second batch of weapons over 80 tons provided by the United States to Ukraine has arrived in the capital Kiev. Just two days ago, the United States provided Ukraine with the first shipment of “lethal weapons” exceeding 90 tons.

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In addition, British Defense Secretary Ben Wallace said on the 17th that the British side has decided to provide Ukraine with a batch of “light defensive anti-armor weapons systems”, and a small group of British personnel will go to Ukraine to provide relevant training.

The German government has refused to export weapons to Ukraine. Prime Minister Olaf Scholz said at a press conference on the 21st that the country has not supported the export of lethal weapons in recent years. In addition, Germany also blocked the export of US-made weapons to Ukraine by Estonia, Lithuania and Latvia.

The “Wall Street Journal” said on the 23rd that Germany is so cautious in Russia and Ukraine because Germany is too dependent on Russia’s natural gas supply. In the event of a conflict between Russia and Ukraine, Germany will become vulnerable because of this dependence, and it will be difficult for Europe to impose sanctions on Russia.

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Germany has become the world’s largest buyer of Russian natural gas due to its policy of reducing nuclear power and phasing out coal-fired power plants in recent years. According to Eurostat, more than half of Germany’s natural gas imports come from Russia. The average proportion of natural gas imported by other EU countries from Russia is not low, reaching 40%.

And Germany’s imports will rise. The Nord Stream 2 pipeline, which transports natural gas from Russia to Germany via the Baltic Sea, was completed in September last year, but has not yet been officially put into operation. The pipeline is expected to double German gas imports from Russia.

The pipeline, which will transport 55 billion cubic meters a year, was originally expected to be completed by the end of 2019, but was delayed by nearly two years due to U.S. sanctions. The United States and its Western allies have been pushing Germany to pledge to immediately seal the Nord Stream 2 pipeline if Russia intervenes militarily in Ukraine.

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