China's lateritic nickel ore market to see 60,000 mt glut in 2019

SHANGHAI, Jul 25 (SMM) – This year is likely to see an oversupply of 60,000 mt of lateritic nickel ore domestically, with estimated production of high-grade nickel pig iron (NPI) at 510,000 mt and the overall imports of ore at 570,000 mt, SMM forecasts. The readings are based on nickel content. 

China's imports of lateritic nickel ore rose 15% from a year ago to stand at 28.68 million mt, on wet basis, in the first half of 2019, with imports of medium- to high- grade ore up 10% and that of low-grade ore up 48%, customs data showed. 

Greater imports of low-grade ore from the Philippines and medium- to high- grade ore from Indonesia accounted for the increases. 

Rising production of NPI with low Ni content in China encouraged the imports of low-grade lateritic nickel ore from the Philippines. A surge in prices of iron ore also prompted domestic steelmakers to procure low-grade nickel ore, with Fe content of around 49%, as an alternative for iron ore.  

SMM calculation based on customs data showed that some 27%, or 610,000 wmt, of low-grade nickel ore imports in June were consumed in the steel industry. 

In January-June, China’s imported some 15.5 million wmt of lateritic nickel ore from the Philippines, up 6% on the year, with imports of low-grade ore rising 49%. Imports of medium- to high- grade ore from the Philippines, however, slid 10% year on year, squeezed by a greater market share of Indonesian materials. 

SMM learned that medium-grade nickel ore from the Philippines usually contains 1.3-1.5% Ni, while the Indonesian counterpart holds Ni content of 1.65% and above. The Philippines has slowed its exports of nickel ore with a grade below 1.5% as the share of Indonesian cargoes expanding. 

For 2019, some 43 million wmt of nickel ore from the Philippines is expected to enter China, with medium- to high- grade ore standing at 24.8 million wmt and low-grade ore at 18.2 million wmt, SMM assessed. 

In the first half of 2019, some 12.38 million wmt of Indonesian lateritic nickel ore moved to China, up 32% year on year, with medium- to high- grade ore accounting for 97%. 

Imports of Indonesian ore is expected at 26 million wmt for the whole year, down from SMM’s previous estimates of 27-28 million wmt, on potential slow obtaining of new quotas at Indonesian mines amid stricter approvals. 

Materials from New Caledonia accounted for the rest of China's lateritic nickel ore imports in January-June, standing at 810,000 wmt, down 23% on the year. Higher sea freight kept Chinese importers from moving nickel ore from Guatemala this year. 

SMM expects lateritic nickel ore imports from countries other than the Philippines and Indonesia to shrink 21% from 2018 to stand at 1.6 million wmt this year.