SHANGHAI, Nov. 30 (SMM) – China’s major nickel producers agreed an initial plan to cut output by 100,000 tonnes in 2016 during the meeting last Friday, according to SMM sources.
Will the cut, led by eight large nickel producers in China, help lift nickel prices?
If the plan were carried out effectively, China’s nickel market will witness de-stocking, and will see a supply shortage in 2016, based on SMM expectation of 500,000 output of primary nickel in 2016.
“The plan, however, looks more like a painted vision, and the agreement, not legally binding, will be to no avail once profits are reachable, as seen in the zinc market,” SMM nickel analyst says.
China’s major zinc smelters reached an agreement to cut output two weeks ago, but several days after the plan, one producer joining in the cut agreement sold out goods secretly after prices rose, dwarfing their cut efforts.
The average loss at domestic EAF-NPI producers is around 20%, and 9% at domestic RKEF-NPI producers, based on SMM profit-loss data in the week ending Nov. 27.
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