Will LME Nickel Keep Rising Strength Seen in 2017 Chinese New Year Holiday? SMM Reports

SHANGHAI, Feb. 4 (SMM) – LME nickel rallied from lows during the 2017 Chinese New Year Holiday from January 27 to February 2. LME nickel registered a 5-day rising streak after the Philippine’s decision to close 21 mining operations, and most of the mines are nickel ore producers, sending LME nickel up to $ 10,500 per tonne.

LME nickel met resistance to climb higher during Asian trading hours on February 3, and surrendered some gains made during the holiday period in China. 

What’s Outlook for Nickel Price before Chinese New Year Holiday after Indonesia’s Export Easing? SMM Reports

“The Philippines’ environmental crackdowns will continue supporting LME nickel, but the rising momentum will likely halt at around $11,000 per tonne before Lantern Festival on Feb. 11,” SMM nickel analyst expects.

China Hanking to Resume Nickel Mine Production in Indonesia

The Department of Environment and Natural Resources (DENR) of the Philippines on February 2 ordered the closure of 21 mining firms for destroying the environment of local communities where they are operating, including 17 nickel ore producers. These companies can appeal to Office of the President before its decision.

The Philippines have taken measures to fight environmental degradation since Rodrigo Duterte took office last June, and Environment Secretary Gina Lopez, after ordering to close some nickel mines, still take a tough stance on mining operations which violates rules. The news of closures of nickel mines in the Philippines has kept stirring up market turbulence, and ore supply worries from the closures helped bolster up nickel prices.

However, nickel ore exports from the Philippines to China have been limitedly affected by this from the second half of 2016, SMM finds.

According to China Customs, China imported 30.57 million tonnes of nickel ore from the Philippines for the whole year of 2016, down 11 percent from 2015’s, and the decline was narrower due to large imports during 2H 2016 (over 90 percent of Philippine nickel ore are exported to China). In early 2016, The Chamber of Mines of the Philippines announced to cut nickel ore exports by 20 percent in 2016. The fact was nickel ore exports from the Philippines were in full swing in Q3 and Q4 2016 when profits expanded with rising nickel prices and fake scarcities of ore supply.

“The Philippines now takes a tough stance on environmental crackdowns, but actual impact on nickel ore exports should not be overestimated, and profit is one fundamental factor on market supply,” SMM explains.

Eyes should be also on Indonesia’s policy. The Jakarta Post reported January 24 that Indonesia would issue new rules on mineral exports soon, which will be linked to the development of smelters. Export duty will be exempted once the smelter progress reaches 30%, and the duty will be 5 percent if the progress reaches 7.5-30 percent, and will be 7.5 percent for the progress below 7.5 percent. If the policy is implemented, the global nickel ore market will be rebuilt, and ore supply from Indonesia will offset supply loss from environmental crackdowns in the Philippines.

The pending policy will leave bullish bets pending. 

For news cooperation, please contact us by email: sallyzhang@smm.cn or service.en@smm.cn.