SHANGHAI, Aug. 16 (SMM) – Recently, China’s high-grade NPI market has registered rapid increases, and producers which suspended production are able to run at the profit/loss brink after price gains.
Do those off-line producers have plans to restart production? And what factors will influence their plans?
Environmental Factor Bites Into Profits
In order to reduce pollution and improve air quality, coal delivery by automobile will be forbidden at the Port of Tangshan, (including the Port of Jingtang and all docks at Caofeidian Port), Tangshan government announced on August 9. SMM learns from NPI producers in north China that the ban will increase their costs, and this will add to their hesitation in production resumption.
The ban will grow costs at NPI producers in the region, and this will thwart those intending to restart production.
No Stockpiling Plans at China NPI Producers for Upcoming Monsoon in Philippines? SMM Reports
SMM learns that one high-grade NPI producer in Huade County, Ulanqab, Inner Mongolia plans to restart production in mid or late August. The producer, having two 16,500-KVA EAFs, has some ore inventories on-hand, and some of them are stored in the plant, while some are stockpiled at the Port of Caofeidian. Whether or not the ban will affect its ore transportation at the port will influence its actual restart date. First, transportation fees from Caofeidian to Ulanqab have increased from 80 yuan to around 120 yuan per tonne, which will grow costs by almost 50 yuan per mtu. Second, transportation time will be longer. Hence, output growth from production resumption at high-grade NPI producers will be very limited in the short term despite price gains.
For those suspended EAF producers in Inner Mongolia, production costs are estimated at 956 yuan per mtu based on CIF price of $38 per tonne for Ni 1.5% ore, below than Inner Mongolia high-grade NPI ex-works price of 935 yuan per mtu published on SMM website on Aug. 16, remaining in losses.
One Shandong EAF NPI Producer Closes for Environmental Factor, SMM Reports
Before the ban on coal transportation by truck at Caifeidian, production costs at EAF NPI producers in Inner Mongolia are the lowest of the type of producers. Based on SMM NPI Cost Model, Inner Mongolia EAF NPI producers remain in slight losses if sourcing ores at current price.
Tight Cash Restricts Production Resumption
Based on SMM NPI Cost Model, domestic EAF NPI producers have kept running in the red since the beginning of the year, leaving tight liquidity. Except EAF NPI producers in Inner Mongolia, other producers of the type in other regions have suffered no impact from the ban, which is implemented for environmental factor, but it is difficult for them to return online within 2-3 months, especially when running out of cash liquidity. It usually takes 1-1.5 months from ore purchases to output coming out, and it also needs another 1-1.5 months to take trial run before normal production.
RKEF NPI Output to Have Small Rising Room
SMM survey of operating rates at domestic RKEF NPI producers shows that producers of the type in Fujian, Jiangsu and Liaoning still have room to increase output due to higher profits and no restraint from environmental factor. But, any rising room will be small.
SMM estimates that output increment from RKEF NPI producers in the three regions will be around 1,000 tonnes (Ni content), based on record-high capacity utilization rate minus current capacity utilization rate.
To sum up, SMM foresees that the rising room for high-grade NPI output in China will be not promising in the coming 2-3 months.
For news cooperation, please contact us by email: sallyzhang@smm.cn or service.en@smm.cn.
![[Analyse SMM] Les prix de la fonte de nickel de haute qualité baissent alors que l'offre se redresse et que l'activité du marché ralentit](https://imgqn.smm.cn/usercenter/LNpBh20251217171732.jpeg)
