LME Week: Winter cuts to buoy nickel prices

LONDON, Oct 8 (SMM) – Environmental restrictions are likely to support nickel prices into the winter, and this will continue to limit the response from nickel pig iron (NPI) prices despite significant availability of nickel ore, said Ian Roper, SMM's general manager. 

Winter cuts will impact NPI prices to a greater extent this year than the last and this is likely to keep nickel prices tighter over winter. Despite weaker NPI output, China’s refined nickel imports continue to fall, he told delegates at LME week in London on Monday October 8.

In Indonesia, NPI production will increase inthe fourth quarter, driven by increasing operating rate from Delong and more capacity slated to be commissioned during the last quarter. For 2019, Roper expects a surge of as much as 200,000 mt in Indonesian NPI output.

Global NPI production is estimated to rise to some 687,000 mt in nickel content this year, with 442,000 mt Ni in China and 246,000 mt Ni in Indonesia, showed SMM data. China’s production has been lower than SMM's expectations at the start of the year, given the environmental crackdown in the middle of the year. 

Indonesian exports to China weakened recently as both NPI and stainless steel exports targeted other markets, he added

Rising profit margins will increase domestic production of the #300 series stainless steel in the fourth quarter, Roper said. Guangqing plant, which belongs to Tsingshan Group, will increase production of the series in October from 100,000 mt to 170,000 mt per month. Tisco and ZPSS production will recover from October as they completed annual maintenance in September.

China nickel inventory continued to declined due to increasing demand from the stainless steel sector even as imports have increased since July, Roper said. 

SMM data showed that deliverable nickel stock in Shanghai declined to 85,000 mt at the end of August 2018, down 6% from the end of last year, and down 27% from the same period last year. LME nickel inventory decreased to 241,000 mt, down 35% compared to the end of last year.

Separately, a poll conducted during LME week identified nickel as the base metal with the greatest potential for 2019.