15 May 2023 – The Chinese NEV market continues to pick up significantly. Market sources report tight nickel inventories and lack of availability. Nickel inventories at the SHFE continue to be historically low and are down 94% from 2020 levels. And U.S. homebuilder stocks have experienced a significant surge in recent months. Shares of U.S. homebuilding companies in the S&P 1500 Homebuilding Index are up an impressive 48 percent since last October.
Chinese NEV Market pulls away, nickel in short supply
The Chinese market for New Energy Vehicles (NEV) and the quantities of batteries required for them, have led to an acute nickel shortage in China, according to market sources.
NEV sales figures double
Given the numbers the Chinese auto industry is leading, that’s hardly surprising. In April alone, NEV sales more than doubled to nearly 640,000 units. And compared to the first four months of last year, sales have jumped to more than 2.2 million vehicles, or by more than 43%.
BYD pulls up massive factories
The efforts of Chinese automakers, such as Chinese automaker BYD (Build Your Dreams), are currently pulling up massive factories in China in record time. These mass-produced manufacturing plants for Battery Electric Vehicles (BEV) have annual capacities of more than 1.2 million vehicles in some cases.
So where has the overcapacity gone?
This quickly checks why the warehouse stocks at the SHFE are plummeting. Whereas in May 2020 they still stood at around 27500 units, on May 12, 2023, there were just 1737 units left in the warehouses – which corresponds to a drop of almost 94%. And the nickel stocks of the LME are compared to 2020 also only at just under 17% and fall for months steadily further. Since much of this is also likely to be unsaleable nickel of Russian origin, stocks are probably much lower.
US homebuilding stocks experience significant rise
U.S. homebuilding stocks have experienced a significant rise in recent months. Shares of U.S. homebuilding companies in the S&P 1500 Homebuilding Index have gained an impressive 48 percent since last October. This upward trend has been fueled by several factors.
Large U.S. homebuilders often offer construction financing at lower interest rates. This allows more buyers to qualify for mortgages, which in turn prevents larger discounts that could occur due to higher interest rates.
Historically low availability for existing properties
The number of available existing homes in the U.S. market is historically low, stabilizing home prices and increasing demand for new construction.
Large builders particularly benefiting
Challenges in supply chains had particularly weighed on small private companies that dominate U.S. home construction. As a result, more construction contracts shifted to the large corporations. The share of new construction business held by the three largest publicly traded construction companies rose from 25 to 30 percent.
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