Exemption of port construction dues reduces costs at Chinese nickel ore importers

SHANGHAI, Mar 5 (SMM) – Foreign trade vessels that arrived at Chinese ports between March 1 and June 30 are exempt from port construction dues, which are paid by the Chinese importers to local authorities, a move aimed at reducing costs at domestic producers to facilitate the resumption of industrial production amid the coronavirus outbreak. 

Based on the original regulations, cargoes on foreign trade vessels arrived at Chinese ports should be charged a port construction fee of 4-5.6 yuan/mt. 

For Chinese importers of nickel ore, the exemption of port construction dues could reduce their costs by 220,000-308,000 yuan for importing a vessel of cargoes of 55,000 mt, according to SMM calculations.

The reduction in costs stands at $0.58-0.8 for importing per mt of 1.5% Ni lateritic nickel ore from the Philippines, SMM calculates based on an average price of $41/wmt (on a cif basis) for the product as SMM assessed on March 5. 

From March 1 to Jun 30, other types of port charges such as harbour dues on cargo and port facility security fees are also cut by 20%, according to the latest policy. 

As of March 5, trades of seaborne nickel ore remained stagnating despite the reduction in port fees, as most nickel pig iron (NPI) producers in China struggled against the headwind of demand recovery delays. An NPI plant in east China slashed prices in enquires to only $30/wmt for 1.5% Ni nickel ore from the Philippines, which barely accepted by traders. 

Most NPI producers in China currently have sufficient ore inventories that could meet production need for no less than two months, as scaled-back operations slowed the consumption of feedstock. This kept them on the sidelines about restocking and resulted in muted trades. 

SMM expects some downside potential in nickel ore prices after the rainy season in the Philippines, but any downsides will be capped by a rise in downstream demand. Major NPI mills in China with cost advantages will be able to secure ore supplies.