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Fastmarkets’ initial low-carbon premium for nickel briquettes captured existing regional price differences, with growing awareness and legislative incentives indicating there is potential for a strong market to emerge. Fastmarkets launched the nickel low-carbon briquettes premium, cif global following a month-long consultation process.
Attention and demand for transparency on the potential value add that low-carbon represents has grown significantly in recent months amid a sustained period of low prices in the nickel market as the influx of low-cost Class 2 nickel production from Indonesia began to turn sentiments bearish.
On top of this, the London Metal Exchange’s decision to fast-track new nickel brands to boost liquidity on the exchange drew concern from some in the market, with nickel miner BHP calling on the exchange to change its responsible sourcing definitions.
Fastmarkets assessed the inaugural nickel low-carbon briquette premium, cif global, at $300-880 per tonne on Wednesday May 1, with the wide spread reflecting regional differences in the markets.
This premium assessment is broadly in line with existing briquette premiums in Europe and North America.
Fastmarkets assessed the nickel briquette premium, in-whs Rotterdam at $100-300 per tonne on Tuesday April 30, unchanged from the previous session.
In comparison, Fastmarkets assessed the nickel briquette premium, delivered Midwest US at 40-45 cents per lb, also on Tuesday April 30.
Sentiment was mixed regarding low-carbon premiums, with some seeing clear added value when it comes to low-carbon material, while others remain more skeptical.
“We are hearing more and more interest in low carbon, I think [low-carbon] premiums are inevitable,” one producer source said, but added that it was not yet that widespread.
One trader said there was an element of low-carbon pricing, with customers seeking specific brands.
“[The] question [then] becomes are customers paying up for low-carbon or just for better origins?” the trader said.
Other market participants did not share this view, however.
“Nobody really cares about low-carbon nickel. None of my consumers are going to pay more,” a second trader told Fastmarkets, highlighting the fact that some consumers in Europe were happy to take material produced in areas such as Indonesia.
“We don’t see a premium for low-carbon briquettes. [There are] already low-carbon briquette options in the market,” one consumer told Fastmarkets.
Although sentiment remained mixed on the existence of specific low-carbon premiums on Wednesday, many market participants highlighted the importance of increased transparency and sustainable sourcing practices in the market.
They also pointed to the importance of transparency about the carbon levels of nickel producers given the expectations of increased legislative action in Europe, including the expansion of the carbon border adjustment mechanism (CBAM) and the launch of the European Battery Passport initiative.
Specific details around these policy initiatives remain limited, with only ferronickel and nickel pig iron (NPI) included in CBAM at present.
Low-carbon premiums are not a new phenomenon in the base metals complex, with Fastmarkets publishing low-carbon aluminium premiums since 2021.
Although the two markets have fundamental differences, there are potentially instructive insights that can be gleaned from the pricing history of low-carbon premiums in aluminium.
Rather than a standalone premium assessment like in nickel, Fastmarkets’ low-carbon aluminium prices operate as a differential to existing premium assessments, particularly the aluminium p1020a in-whs Rotterdam duty paid premium, a benchmark in the region.
Upon the launch in 2021, the initial differential was $0 per tonne to the duty paid premium, with few market participants seeing any value-add for low-carbon material.
But over recent years a clear differential has emerged.
Fastmarkets’ most recent assessment of the aluminium low-carbon differential P1020A, Europe was $10-25 per tonne on April 5, which represents an additional 3-8% on the value of the aluminium P1020A, in-whs dp Rotterdam, which was assessed at $305-325 per tonne on April 30.
This development in aluminium highlights the potential for such trends to emerge in nickel over time – once clear definitions and sentiment development.
For now, low-carbon nickel remains firmly in the spotlight.
Upon calls from the industry for transparency into the additional value of low-carbon nickel, the London Metal Exchange declared its position, citing concerns over market scale and a lack of clear definitions.
But the LME said it would work with its partner, MetalsHub, to begin publishing low-carbon nickel data for Europe, based on liquidity captured on MetalsHub’s trading platform.
Although low-carbon nickel is in the spotlight, there is still room for future evolution and developments in this market.
Fastmarkets remains committed to pricing the open and competitive market and understands the importance of continued reviews of its price specifications to ensure that it accurately reflects the needs of the market.
As a result, although the price is in its infancy, Fastmarkets is currently running a further consultation to address feedback received in the initial consultation.
Keep track of the dynamics and volatility in the nickel market with Fastmarkets. Find out more on market trends and price updates when you visit our dedicated nickel market page.