Nickel Trends 2023: Market Dynamics & Stainless Steel Surge

Nickel continues to bounce along the bottom of the $20,000-$22,000 ($9-$10/lb) range where it's been since early June and has only briefly broken $9/lb.  LME inventories remain near multi-year lowsStainless prices are now moving higher in multiple markets which is generally a good signal for overall market conditions.  Over the last few weeks, have seen ore prices/NPI prices move higher, now joined by stainless prices in China and now in Europe as the market seems intent on restocking after spending most of the year destocking. Despite Chinese market weakness,  Chinese stainless steel production was up more than 11% in the first half 2023. Remember that stainless still more than 2/3  of global nickel demand so good sign that should see the expected demand improve through the balance of the year.Quiet week news-wiseTalon Metals had good infill intercept using to look at the area of higher PGE content -  101.71 meters of high-grade nickel-copper mineralization grading 1.94% Ni,1.84% Cu, 0.35 g/t Pd, 0.64 g/t Pt and 0.62 g/t Au (1.61 g/t PGEt + Au) (3.04% NiEq) (see Table 1).Everyone is entitled to their opinion, but commentator DrJimJones materially misstated a couple of facts in a recent piece on Canada Nickel Corp.1. DrJimJones was quoting from PEA in May 2021 as to what needed to be spent for CNC to go to the next level, and then compared that amount to the June 2023 cash balance. Clearly just a mistake or conflation of data on his part. He may not have noted that since May 2021, CNC has raised nearly £$100 million in the interim to do what is needed, leaving their cash balance in a healthy position to finish their FS. I’m sure he would be willing to check and validate this, and shortly republish his thoughts using the correct assumptions.2. It is also worth noting that Crawford produces a FeCr concentrate which has some nickel in it.  This product would make CNC the sole chrome producer in North America, and provide a low-carbon feed for the stainless market in North America (stainless steel is a mixture of nickel, iron, and chrome).  The stainless market in the United States has significant premiums -more than $800-$1,000 price premiums versus Asia, and conversion margins of $1,000 per tonne (or ~$6/lb premium per pound of contained nickel) so good to get units into this market.3. In any technical report, always good to look at the assumptions.  Assumptions are only as good as a company that signs off on technical reports.  Lots of bad technical report companies out there.  CNC however uses Ausenco, who not only do studies but actually bid on & build these projects. Ausenco signed off on the overall report.  CNC’s work on the pricing for this material was done by CRU, a leading metal price consultancy, and SMR – the leading stainless and alloy market consultant.4. Interestingly, iron price is not iron ore price – it is Fe scrap price in North America (which is how stainless feed material is priced) - it averaged $US407 per tonne in February 2023 according to USGS versus the $290/tonne number used in 2021 PEA. So DrJimJones talk of iron ore pricing and decline in iron ore pricing is again perhaps conflating data. Again I’m sure given the chance DrJimJones will choose to restate their thoughts and the impact of their conclusions for CNC.5. And in addition, the current US ferrochrome price which was the basis for chromium pricing was assumed to be $1.04 per pound in the CNC 2021 PEA, whereas it averaged $3.08 in 2022, and was $2.55 per pound in June 2023.6. Please also remember that Anglo American, one of the world’s largest mining companies, made a 9.9% investment in Canada Nickel so they must have been comfortable with the CNC project assumptions and their own year-long diligence process.