SHANGHAI, Jul 30 (SMM) – Medium-grade nickel ore prices are only expected to rebound from late September as supply overhang is to stay for the third quarter, SMM believes.
Chinese demand for the three months to September is forecast to be 14% lower than the same period last year as production at some plants has yet to recover from cuts on environmental probes.
Buyers were not as keen to stockpile as they were last year as shipments from Indonesia would make up for some loss from the Philippines during its typhoon season in September and October.
On the supply front, we expect the Philippines to ship over 4 million wmt of medium- and high-grade nickel ore every month during the July-September period, while Indonesia is set to ship close to 2 million wmt per month.
This is set to see an 11% year-on-year increase in supply of medium- and high-grade nickel ore from the two Southeast Asian countries, to over 17 million wmt in the third quarter.
However, the oversupply situation in the third quarter would be an improvement from the second quarter, and Chinese buyers have already started to stockpile.
Future shipments from the Philippines are also expected to be depressed due to heavy rainfalls.
In addition, we see limited downward room in nickel ore prices as they currently stand close to the costs, at $16-18/wmt fob Philippines for 1.5% Ni.