SHANGHAI, Mar. 28 (SMM) --
According to data from China's Customs, China's YTD imports of laterite nickel ore in the first two months in 2011 were 3.52 million mt, up by 68.7% YoY and a new record high, while imports of laterite nickel ore in the fist two months of 2010 were 2.1 million mt. Production of refined nickel, NPI, and carbon steel drove growth of imports of laterite nickel ore for three reasons.
First, the commissioning of electric arc furnaces require large amounts of laterite nickel ore, and according to SMM statistics, more than 180 kt/yr in NPI capacity will be commissioned in 2011. China's imports of laterite nickel ore during 2010 exceeded 25 million mt, the highest level since 2005. and nickel in NPI output during 2010 also exceeded 200 kt/yr, so with the commission of new NPI capacity in 2011, growth in imports of laterite nickel ore will continue.
Second, demand for laterite nickel from refined nickel producers using hydrometallurgical technology is also adding to higher imports of laterite nickel ore. Guangxi Yinyi, Jiangxi Ganfeng Lithium, and Sichuan Nikeguorun New Material all use laterite nickel ore for refined nickel smelting, and since technology for refining nickel from laterite nickel ore is maturing , many refined nickel producers plan to expand capacity with newer technology in 2011.
Finally, since iron ore prices have surged recently, laterite nickel ore with grades below 0.8% is imported by many steel mills as a substitute for iron ore. This kind of nickel ore is mainly from the Philippines and used directly for carbon steel production.
SMM believes imports of laterite nickel ore will continue to grow. China's laterite nickel ore is now mainly imported from the Philippines and Indonesia which are both experiencing the seasonal monsoon. The dry season in these countries is from April to September, while the wet season lasts from September to March. The wet weather hampers nickel ore exports, but SMM believes that with the beginning of the dry season, plus the start of the peak NPI production season, China's imports of laterite nickel ore will be up in March.
According to data from China Customs, China's imports of refined nickel during February were 13.095 kt, down by 21.1% MoM, but up by 7.0% YoY. The domestic/LME nickel price ratio has generally been unfavorable for imports, but was favorable for a few days. In this context, importer enthusiasm was still low. The negative price spread between domestic and LME nickel prices during February expanded further from January, and there were fewer working days in February due to the Chinese New Year, keeping imports lower.
China's exports of refined nickel during February were 2,424 kt, up 55.4% MoM, but down 14.2% YoY. Due to competition from NPI, domestic demand for refined nickel was weaker, which allowed refined nickel stored in bonded areas to be exported to other countries.
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