Nickel import window to open on short and frequent basis

SHANGHAI, Aug 13 (SMM) – China’s import window for nickel is likely to stay open on a short but frequent basis in the near future with rising domestic demand and low inventory, SMM believes.

With imported materials flowing into the market whenever the window opens, we are unlikely to see the window open for an extended period.

Import losses began to widen from the start of this year, to around 10,000 yuan/mt in April, when LME nickel price was boosted by the US sanctions against Russia and worries over a spill-over effect.

However, the losses narrowed in July, when production of stainless steel recovered gradually from maintenance work.

Output of #300 products rose 5% from June to 1.07 million mt in July, and production is expected to extend its increase this month to 1.1 million mt. Steelmakers’ producing enthusiasm improved as profits started to pick up, to 600-700 yuan/mt in August for those with rotary kiln electric furnaces (RKEF).

More #300 stainless steel orders from the military field in the second half of the year and the end of low season amid high temperature also add to expectations of rising demand. 

On the supply front, uncertainty remains given regular domestic environmental probes. This is despite SMM’s estimate that nickel pig iron (NPI) output would rise 9% from July to 37,000 mt in nickel content in August, as previous round of environmental review ended. In July, the output recovered to 34,000 mt in nickel content, up 4% on the month. 

Some 4,800 mt of monthly production is set to increase at Xihai Technology in Shandong province, as its eight NPI furnaces are expected to be commissioned by the end of this year. 

Separately, higher Ni content in NPI will slightly depress the consumption of refined nickel. As imported nickel ore from Indonesia has been of higher grade since April, nickel content in domestic NPI increased to 11-12% as of August, an SMM survey found. Steel mills could lower their refined nickel proportion in raw materials to 3-5%, or as low as 1%, when they use NPI with 12% Ni, SMM learned.