SHANGHAI, Jul 14 (SMM) – China’s primary nickel market will be in a wide surplus this year, as the coronavirus crisis takes its toll and given the aggressive nickel pig iron (NPI) capacity expansion in Indonesia, said Rachel Liu, senior nickel analyst at SMM.

Speaking at the 5th China International Nickel Cobalt Lithium Summit in Ningbo, Zhejiang province on Tuesday July 14, Liu expected a glut of 94,600 mt Ni for China’s primary nickel market for the year of 2020, much larger than 9,700 mt Ni in 2019. The market was in a deficit of 50,600 mt Ni in 2018, Liu added.

The sharp widening of the surplus comes amid a slowdown in consumption growth and a surge in imports of ferronickel and NPI. Liu expects China’s actual consumption of primary nickel to inch up 0.8% to 1.34 million mt Ni in 2020, while apparent consumption—which consists of domestic production and imports—will increase 1.9% to 1.43 million mt Ni, propelled by a 48.7% increase in imports of ferronickel and NPI.

Indonesia has overtaken China as the world’s top NPI producer, as its ban on nickel ore exports—effective from the beginning of this year—boosted prices of the raw material and pressed Chinese NPI producers.

For the first six months of 2020, Indonesia produced 254,200 mt Ni of NPI, compared to 249,900 mt Ni from China, according to data compiled and calculated by SMM.

Faster-than-expected ramp-up of new capacity is expected to boost Indonesia’s NPI year-to-date output to 409,200 mt Ni by the end of the third quarter, widening the gap between China’s output, which is estimated at 372,900 mt Ni.