I. Nickel ore price review 2023
China's nickel ore prices dropped palpably throughout 2023.
Taking Ni 1.5% nickel ore as an example, the prices (CIF China) showed an annual fall of nearly $20/wmt year on year at $59.2/wmt on average in 2023.
In detail, the prices averaged $72/wmt in the first quarter due to high shipping cost as well as restricted shipment from the Philippines, before falling to the annual low of $49/wmt in the second and third quarter when the NPI (nickel pig iron) supply from Indonesia climbed substantially.
The prices rebounded entering the fourth quarter amidst the abrupt anti-corruption investigation initiated by the Indonesia government towards the mines, which triggered extensive concerns over NPI supply crunch, in addition to low high-grade nickel ore inventory in China. However, the momentum was unsustainable because the supply shortage expectation failed, and domestic NPI plants suffered serious losses during this period. As a result, the nickel ore prices hovered around $55/wmt.
Source: Mysteel
The prices of low grade nickel ore dropped as well through 2023 in light of rising exports from the Philippines, despite the rising production of 200-series stainless steel in China.
For example, the CIF prices of Ni 0.9% Al 15% nickel ore showed an annual fall $6/wmt at $42.8/wmt on average in 2023. The price drop was quick in March after the Philippines resumed normal shipment, and the ocean freight declined as well. The anti-corruption investigation at the beginning of the fourth quarter also slightly boosted the low grade nickel ore prices, which pulled back afterwards along with weakening stainless steel prices.
II. Nickel ore supply review 2023
1. Global supply
The global nickel ore reserves have been reducing since 2014 (81 million tonnes in Ni. content in 2014, 79 million tonnes in 2015, 78 million tonnes in 2016, and 74 million metal tonnes in 2017).
The downtrend ended in 2018 thanks to the new resource discovery. The main increment was contributed by Indonesia, with its reserves increasing from 4.5 million tonnes in Ni. content to 21 million tonnes, accounting for 22.11% of the total, making it the largest country by nickel ore reserves.
At present, the global nickel ore reserves have exceeded 95 million tonnes in Ni. content, including 60% laterite nickel ore and 40% nickel sulfide ore.
China's nickel ore resources only account for 2.95% of the world's total and are mainly consisted of nickel sulfide ore, which are used to produce refined nickel. And China still needs to import immense laterite nickel ore from Southeast Asian countries to produce NPI.
2. China's nickel ore imports
According to the General Administration of Customs of the People's Republic of China, the Philippines, Indonesia, New Caledonia are the major nickel ore suppliers to China. And the imports of nickel ore jumped 10.3% YoY at 43.93 million tonnes in 2023 as a result of post-pandemic economic recovery and rising stainless steel production.
Source: Mysteel
Specially, the imports from the Philippines stood at 37.44 million tonnes in 2023, an increase of 13.5% from 2022, taking up 85.22% of China's total imports in light of relatively stable mining environment in the country.
From a variety-wise perspective, China's imports of nickel sulfide ore dropped year on year following the rising supply of alternative nickel matte and MHP, which reported 0.27 million tonnes in 2023, down 39% YoY. China's imports of laterite nickel ore rose 14% from 2022 at 43.65 million tonnes in 2023.
III. Nickel ore inventory review 2023
China's nickel ore inventory showed a V-shaped trend in 2023. The nickel ore inventory dropped in the first quarter amid falling supply from the Philippines, but the destocking was slowed by modest demand in China. The inventory started to accumulate in the second quarter when the shipment from the Philippines returned to normal, and the increase was primarily contributed by low grade nickel ore. The inventory rebounded afterwards as domestic market players stockpiled in advance ahead of the rainy season in the Philippines.
Source: Mysteel
IV. Nickel ore market prospect 2024
1. China nickel ore imports
China's nickel ore demand is likely to be weighed on by rising NPI supply from Indonesia. The nickel ore imports are projected to jump 8% YoY at 47.1 million tonnes (wet and dry basis combined) in 2024.
2. China nickel ore prices
Looking ahead over 2024, China's nickel ore prices are likely to continue to fall but at a slower pace. While the demand for nickel ore is likely to be weighed on by Indonesia's NPI, the supply remains relatively sufficient. However, the import cost might be slightly boosted as the Philippines are projected to adjust its export rules. In addition, the rainy season in the Philippines will remain a major factor influencing the prices.
Written by Aggie Hu, huchenying@mysteel.com