China SS mills calm, seeking alternative nickel supply
Prior to the complete ban on all grades of nickel ore exports on January 1 2020, the Indonesian nickel miners and smelters agreed on November 12 to set the price guidance for nickel concentrates sales domestically at $27-30/t for the grade at 1.7% and below, according to the foreign media reports.
“This is to safeguard the interests of the nickel miners (when the ban takes effect), enabling them to sell domestically at a reasonable margin,” an industry analyst in Shanghai commented, noting that the reference price is twice of the original domestic sales price.
Chinese stainless steel producers have not been reacting much to the latest price guidance, as many of them are exploring alternative supplies when Indonesia closes the door of nickel concentrates exports.
“The export ban has already been digested, and China’s prices of both nickel and stainless have returned to the downward trend recently (after the surge on the immediate ban in late October),” a stainless producer in Southwest China’s Guangxi province shared.
The three-month nickel buyers’ price on the London Metal Exchange declined by $1,955/tonne from October 24 to $14,975/t as of November 15, and the most-traded nickel November contract on the Shanghai Future Exchange (SHFE) closed at Yuan 118,470/tonne ($16,891/t) last Friday, down Yuan 14,610/t from October 24.
During the same period, the 304/2B 2mm cold-rolled stainless coil price in Wuxi, East China’s Jiangsu province, decreased another Yuan 500/t from October 24 to Yuan 15,550/t in-warehouse and including the 13% VAT as of November 15, according to Mysteel’s database.
China’s stainless steel producers have experienced a few rounds of Indonesian policy changes regarding nickel resources.
Indonesia introduced a ban on the export of unprocessed minerals including nickel ore in January 2014, but it reallowed the processed low-grade nickel concentrate with content at 1.7% and below to exports in January 2017, but all exports will be banned starting January 2020.
With the changes of the Indonesian policy on nickel exports, China’s nickel ore import from Indonesia fell 74.1% on year to 10.6 million tonnes for 2014, and the tonnage surged tenfold on year to 3.8 million tonnes for 2017, according to the official statistics.
With the complete ban less than two months away, China’s stainless steel producers are exploring new supply sources to satisfy their need for nickel, especially for the 300-series stainless production.
“We plan to import some nickel ore from the Philippines, or buy some nickel alloys such as nickel pig iron or ferronickel from Indonesia instead,” a nickel trader in Guangxi, admitting that it is hard to predict the price movement of nickel or nickel alloys for the time being.
“We still need to understand the actual demand for nickel from downstream stainless producers to forecast any prices,” he explained.
Besides, China’s demand for nickel resources may not be as robust, as the country, being the world’s largest stainless producer and nickel consumer, has been struggling with stainless oversupply especially for the 300-series stainless, Mysteel Global notes.
“China’s stainless steelmakers may adjust their output should nickel and nickel alloy prices surge to an unacceptably high level,” the Shanghai-based market source said.
China produced 26.7 million tonnes of stainless in 2018, much higher than the apparent consumption at 21.3 million tonnes, and among the total output, that for 300-series accounted for 48%, lower than the 52.3% in 2015, according to the data from the Stainless Steel Council of China Special Steel Enterprises Association.
Written by Nancy Zheng, zhengmm@mysteel.com
Edited by Hongmei Li, li.hongmei@mysteel.com
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