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China set to increase nickel imports as LME price slides

Keywords: Tags  China, nickel, refined nickel, imports, People’s Liberation Army, NPI, London Metal Exchange, LME Metal Bulletin

SHANGHAI — China is likely to buy more refined nickel on the international market in the next few months due to falling London Metal Exchange prices, market participants said.

Three-month official LME nickel prices settled at $13,610 per tonne on June 26. The price has fallen more than 20 percent so far this year and in late May reached its lowest level since 2009.

Subsidiaries of the People’s Liberation Army (PLA) have already ordered about 60,000 tonnes of the metal from the international market this year and have plans to purchase more to take advantage of the recent price slide, according to media reports.

"The current nickel price has reached a four-year low, so it should lead to increased buying," a major market participant said.

Meanwhile, with the narrowing price gap between refined nickel and nickel pig iron (NPI), steel mills’ interest in buying the former should revive, sources said.

"As the price of nickel ore is firm but the price of NPI still falling, ... domestic NPI smelters have no way to reduce losses apart from cutting production," said a trader from Shanghai.

Chinese NPI smelter operating rates have recently fallen to about 50 percent because of the market conditions for the product.

The price of refined nickel plate now stands about 6,000 to 7,000 yuan ($968 to $1,129) per tonne higher than high-grade NPI (Ni content 10 to 15 pecent), down from more than 10,000 yuan.

Meanwhile, some market participants also mentioned that increasing numbers of nickel-related finance deals will also cause the country’s imports to rise.

"Copper is now difficult to finance, due to the strict checks by the State Administration on foreign exchange, so this business is now moving to other products like nickel in order to get credit from banks," said a trader from Zhejiang.

In the past five months of this year, China imported a total of 74,787 tonnes of refined nickel, up 21.5 percent year on year. 

A version of this article was first published by AMM sister publication Metal Bulletin.

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