This is a well-planned hunting operation by overseas capital in China's nickel industry
Text/Zeng Jia
"A kilogram of one yuan coin is about 107 yuan, and the value of the melted nickel is 150 yuan."
If it were not for the "demon nickel" rampant, no one would have thought that the renminbi would have this "appreciation" method.
Two days ago, the price of nickel futures on the London Exchange broke through $100,000 all the way, driving domestic stock prices all the way up, and Shanghai nickel 2204 sealed the up-and-down board, reaching 220,000 / ton.
The market rumors that the soaring nickel price is a capital sniper by overseas capital against China's stainless steel king Qingshan Group.
Subsequently, the London Metal Exchange (LME) urgently revised the rules, announcing the cancellation of all nickel trading after 0:00 a.m. on the 8th and postponing the delivery of all spot nickel contracts originally scheduled for delivery on March 9.
Until 7 o'clock last night, Tsingshan Group responded: it has been allocated to sufficient spot through various channels for delivery. Overseas capital suffered its own evil consequences, and this long-short war came to an end.
Behind the capital sniper is the great power game?
Tsingshan Group, the most widely known title is the king of stainless steel. In 2020, the total output of stainless steel crude steel in China was 30.139 million tons, accounting for about 60% of the global output, of which the crude steel output of Tsingshan Holdings reached 10.8 million tons, accounting for about 21% of the global output.
However, what few people know is that in order to cope with the shortage of upstream resources, according to Haitong International Research Report, Tsingshan Holdings' subsidiary company invested in 7 new nickel-iron smelting projects and 3 stainless steel production projects in Indonesia in 2015 and put them into operation, establishing a complete industrial chain from nickel mining to steel smelting.
According to the statistics of investment institutions, Tsingshan Group has a global nickel market share of 18%, and is the king of China's nickel.
Therefore, Tsingshan Group has a decisive impact on international nickel prices, due to the large fluctuations in mineral prices, in order to control risks, Tsingshan Group usually holds a lot of short contracts for nickel futures.
Short selling is a habitual method of controlling risk, which can be analogous to when the apple price is 3 yuan, borrow three apples from others and sell them for 9 yuan, and when the apple price becomes 2 yuan, spend 6 yuan to buy 3 apples to return them, thereby earning the difference.
Tsingshan Group holds short positions in order to control losses in the two cases of rising and falling nickel prices. This practice is extremely common, and the key is the balance between holding short futures orders and spot holdings.
The problem is that the nickel standard for spot delivery by LME is electrolytic nickel, while the Tsingshan Group, which mainly produces high ice nickel from Indonesia, does not meet the delivery standards, and Russia, which accounts for 11% of global electrolytic nickel production, just suffered economic sanctions in the Russian-Ukrainian war, and exports were affected.
In the Tsingshan Group holds a large number of empty orders, in the case of difficulties in retrieving inventory, the price of nickel is frantically raised, once the Tsingshan Group can not get the spot as scheduled, it can only transfer the goods from other places at a high price to deliver on schedule, or pay a high amount to close the position.
According to the London Metal Exchange, an unidentified inventor who holds 50 to 80 percent of LME-monitored nickel warehouse orders for more than a month is clearly confident of rising nickel prices.
It is rumored that the counterparty of this magnitude is the world's largest commodity trader, Swiss Glencore.
Mysterious overseas capital versus China's nickel king, and many people see this event as a game between countries.
Cai Jianyong, chairman of Ningbo Liqin, China's largest nickel ore trader, commented: This is a well-planned hunting operation for overseas capital to China's nickel industry.
Image source: China Fund News
Xiang Guangda, the founder of Qingshan, initially responded: "Foreigners do have some actions and are actively coordinating. Today I received a lot of phone calls, and the relevant departments and leaders of the state are very supportive of Qingshan."
This is seen by many as evidence of the national game.
The London Metal Exchange urgently "pulled out the electricity" when the nickel price was crazy, which also provided Aoshan Group with precious breathing time.
It is worth noting that as early as June 2012, the Hong Kong Stock Exchange had acquired the London Metal Exchange (LME) for HK$16.673 billion.
That's why the LME's announcement is specifically marked "An HKEX Company" under its heading.
New energy vehicles, a state-led industry rise
Why does China's nickel king's financial war remind people of the game at the national level?
This has to mention the significance of nickel for new energy vehicles, just as gasoline is the blood of fuel vehicles.
Qingshan does not fall, which means that the major energy industries represented by Qingshan Group do not fall, which not only involves the interests of the company, but also affects the country's layout of the new energy automobile industry, and is more related to the country's energy security issues.
China is a country that relies heavily on oil imports, according to the General Administration of Customs, China's crude oil imports reached 505.72 million tons in 2019, an increase of 9.5% year-on-year, the scale of oil imports hit a record high, and China's crude oil imports accelerated from January to August 2020, and China's crude oil imports reached 367.52 million tons, an increase of 12.1% year-on-year.
Kissinger said it best: "If you control oil, you control all countries or the whole world." "Combined with the oil prices of these two days, we will know that upstream resources are subject to people and will eventually be reported to consumers."
According to the statistics of the General Administration of Customs of China, crude oil imports in 2021 decreased by 5.4% year-on-year, the first reduction in 20 years, or related to the vigorous development of the new energy vehicle market in 21 years.
In the field of new energy vehicles, it is the country that seeks a way out for the situation of "being necked by oil cards".
In 2012, after the announcement of the huge subsidy policy for new energy vehicles, the Reexamination Board of the China Patent Office and the Canadian state-owned Quebec Hydropower Court only to cancel the patent authorization of lithium iron phosphate battery technology in China and open up living space for domestic lithium iron phosphate battery manufacturers.
In April 2015, the Ministry of Industry and Information Technology issued the "Automotive Power Battery Industry Specification Conditions" (commonly known as the white list), which clearly links subsidies to the white list, and only by using the products provided by the enterprises in the list can the automakers get financial subsidies.
This is the means used by the country in the early days to protect the growth of local battery manufacturers. Today, in order to introduce external competition to enhance the vitality of enterprises, the white list has long been abolished.
The former is a patent war, reducing the production costs of domestic lithium iron phosphate battery manufacturers, and then a subsidy threshold, which firmly binds local battery manufacturers with policy benefits. While driving the development of the battery manufacturing industry, it provides the possibility for China's new energy automobile industry to overtake in curves.
Nowadays, new energy vehicles at home and abroad are almost at the same starting line, but they are all in the predicament of price increases and delivery due to the Russian-Ukrainian War, why is the new energy automobile industry so fragile?
Pull a hair and "rise" the whole body, why new energy vehicles are so brittle
According to the incomplete statistics of the Red Star Capital Bureau, since the end of last year, at least 16 new energy vehicle companies have announced price adjustments, covering the mainstream car purchase range of less than 100,000 yuan to more than 300,000 yuan. Among them, models below 100,000 yuan have a higher increase, and the average price increase is about 4800 yuan.
The development of the new energy automobile industry in the mainland is still in the exploration and market start-up period, with high research and development costs and low profits, once the price of raw materials increases, the cost pressure is easily transmitted to the consumer terminal.
To analyze the fragility of the structure of new energy vehicles, we must first look at where the upstream mineral pressure sources are.
Minerals are like looks, and the day after tomorrow's efforts do not come. The reason why the Russo-Ukrainian war can drive the price increase of new energy vehicles across the board is that Russia has the world's largest high-grade nickel producer Russian nickel Nornickel, whose annual output remains around 210,000 tons.
According to Techcet research data, Ukraine's global supply share of neon gas is as high as 70%, and the global supply share of krypton and xenon gas is 40% and 30% respectively, which can be described as the world's rare gas super wet mother.
Nickel is the core material of ternary lithium batteries for new energy vehicles, and inert gases such as neon gas are the core materials of chip manufacturing.
When the distribution of resources is concentrated, the market demand is tight and there is not enough inventory in the short term, once the war occurs, the two major industries of automobile batteries and chips have to bear the brunt of it.
In the midstream, the core component of the current new energy vehicle - the battery, the current cost of lithium batteries is about 125 US dollars / kWh, to the endurance of 400 kilometers, 100,000 yuan price of new energy electric vehicles as an example, the cost of the battery cell accounts for about 40% of the total price.
At present, there are two kinds of batteries used in new energy vehicles, which can be distinguished from the cathode material into lithium iron phosphate batteries and ternary lithium batteries (using nickel).
The former has a mature process, low raw material costs, and a longer cycle life, but low energy density and low endurance. The latter is costly and slightly less secure, but has a high energy density and a long battery life.
At present, the market is still a situation in which lithium iron phosphate batteries and ternary lithium batteries are divided into two parts.
Only in recent years, due to cost considerations and technological progress, the market share of lithium iron phosphate batteries has increased significantly.
Power Alliance data in January showed that in terms of production, the output of continental power batteries totaled 29.7GWh, up 146.2% year-on-year. Among them, lithium iron phosphate batteries increased by 261.8% year-on-year; ternary batteries increased by 57.9% year-on-year.
It is precisely because of the two worlds, competitive products such as sodium batteries, hydrogen batteries and other technologies are not yet mature, and the product diversity is poor. The industrial chain is vertical, a large number of demand points to a few rare minerals, once the supply is cut off, the car company will only have a share to be fed.
As far as the terminal market is concerned, the main entry point for consumers of mainland new energy vehicles is that the cost of using cars is low, especially in the case of rising oil prices.
Squeezing profits to a minimum, the new power car companies are crowded with 150,000-250,000 low-end electric vehicles.
However, subsidies have declined, and the "spring cold" of raw materials has given the car companies that are fighting price wars a downward spiral.
Taking lithium iron phosphate batteries as an example, 1Gwh batteries need about 2500 tons of lithium iron phosphate cathode material (German nano data), a new energy vehicle with 46KWH with electricity, 1GWH power batteries can meet the needs of 20,000 new energy vehicles.
Therefore, a vehicle will consume 0.125 tons of lithium iron phosphate cathode material, according to the calculation of lithium iron phosphate from the beginning of 2022 to the present 28.2% increase (shanghai steel union data before the deadline: 161,500 / ton), the cost of each vehicle or will rise by about 5,000 yuan.
Even the penetration rate of new energy vehicles is still rising. According to the data of the Association, the domestic retail penetration rate of new energy vehicles in February was 21.8%, an increase of 13 percentage points over the penetration rate of 8.1% in February 2021.
However, the delivery of vehicles is collectively blocked, and the price increase into the tide of the incident is also reminding car companies that prices can no longer be used as the only main factor in the market open for new energy vehicles, and the diversification of market demand requires car companies to make further efforts in technology and services.