SHANGHAI, Apr. 14 (SMM) – It was reported in early April that China’s State Reserves Bureau (SRB) will build nickel stocks. Is it true? 

Looking back on 2015, rumor in July had it that the SRB would build 30,000-40,000 tonnes of nickel reserves, then was proved to be true. In November 2015, it was rumored that the stockpiling agency would buy approximately 6,000 tonnes of Sumitomo nickel in six months, and it was later confirmed. 

How about the latest one? 

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SMM understands the SRB will buy 30,000 tonnes of foreign-brand nickel in six months from January 2016, involving Sumitomo, Russian and Norwegian nickel.

Based on China Customs data, SMM reckons nickel reserve buyout by the SRB is implemented in two stages - June-December 2015 and January-June 2016, with 30,000 tonnes each, both targeting foreign-brand nickel. 

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The 6,000-tonne nickel purchase reported in November 2015 is believed to have been 20 percent of the 30,000-tonne buyout plan during the first stage.  

According to China Customs, China’s nickel imports did not grow significantly until after September 2015. SMM contributes this to companies, in charge of buying stocks, began imports of foreign-branded nickel after digesting on-hand inventories.  

China also reported high nickel imports in February 2016, reaching 28,500 tonnes, up 208.5 percent on a yearly basis. In addition to a small proportion of imports by some traders, the high import is believed to be contributed to SRB stocking activities. First, the Shanghai/LME nickel price ratio was unfavorable for imports in January. Second, supply in China’s domestic spot market was tight in February, sending up spot premiums.    

Currently, utilization rates at domestic downstream producers are and will be improving during April and June. This, combined with buyout activities, is expected to support nickel prices. 

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