Nickel imports in China nab a massive increase
OREANDA-NEWS. China’s imports of refined nickel increased by a staggering 250% in June to 38,545 mt compared to 11,014 mt in June 2014. Quarter on quarter, China’s refined nickel imports increased by 236% in Q2 to 79,911 mt from 23,813 mt in Q1 2015. If this upward trend continues, China could import over 207,000 mt of refined nickel this year — a potential increase of 60% on last year’s total of 129,980 mt.
So, what’s behind the increase in China’s appetite for refined nickel?
Certainly, the Indonesian nickel ore ban, which has been in place since January 2014, has had an impact on Chinese nickel demand. Since January of this year, China has not imported any ore or concentrate from Indonesia, having previously imported 10.6 million mt in 2014 and 41.1 million mt in 2013. This has China looking elsewhere for its nickel ore and concentrate and also needing to diversify the type of nickel it looks to import.
Some of the Indonesian shortfall has been replaced by nickel ore and concentrate from the Philippines. China imported 14 million mt of Filipino ore and concentrate in the first half of this year, up 15% from 12.3 million mt in the first half of 2014, and up by 30% from 10.9 million mt imported in the first half of 2013.
However, overall despite the increase in Filipino imports, China’s total ore and concentrate imports are down 37% in the first half of 2015 at 14.4 million mt from 23.08 million mt in the first six months of 2014.
China has looked to fill some of this gap by supplementing the lack of nickel ore and concentrate with ferronickel imports. Ferronickel imports to China were up by 129% in the first half of 2015 at 321,149 mt from 140,115 mt in the first half of 2014, and were up by 368% from 68,656 mt in the first half of 2014.
So in some respects, China’s appetite for refined nickel can be seen in the broader context of it looking to supplement the fall in Chinese nickel ore and concentrate imports. However, refined nickel imports are also likely to have been boosted by the launch of the Shanghai Futures Exchange nickel contract in March this year. The market has been speculating that participants have been shipping Russian material to China, and Norilsk Nickel confirmed at the beginning of this month that it had registered three brands for delivery against the SHFE nickel contract — the first foreign company among global nickel producers to do so. Russian exports of refined nickel to China were up 32% in June at 21,668 mt from 16,385 mt in May. This represents 56% of China’s refined metal imports in June.
With China looking to diversify its nickel imports and Norilsk Nickel registering on the SHFE, China may well continue to increase refined nickel imports over the rest of 2015. And with nickel prices currently trading near historical lows, this could be a potential buying opportunity for those looking to speculate on the longer-term fundamentals of the market.
Analysts have been forecasting a nickel market deficit in the second half of 2015, and although LME nickel stocks remain high and will need to be drawdown before prices are likely to see a sustained increase, the increase in refined nickel imports to China could offer some fundamental support to the market.