SMM7: at the 2020 China Ni-Cr stainless Steel Industry Market and Application Development Forum held by SMM on July 20, SMM senior analyst Zhang Lingying analyzed the market trend of China and Indonesia laterite nickel ore and nickel pig iron industry in 2020.

Supply and demand Analysis of Chinese laterite Nickel Ore and Nickel Pig Iron Market in 2020

The main supply source of laterite nickel ore in China in 2020

Affected by the global epidemic, Philippine law shipments dropped sharply in the first half of the year, and now normal shipments have returned to normal. SMM estimates that the total export of Philippine laterite nickel ore to China may be about 35 million wet tons in 2020. The total amount of nickel ore imported by the Philippines in 2020 decreased by 20.4% compared with 43.96 million wet tons imported in 19 years, and this year is basically medium-low, equivalent to about 296000 nickel tons of metal; the import of the remaining laterite nickel ore increased by 23.2% in 2020 compared with 2019, equivalent to about 98000 nickel tons.

After falling to the lowest level since 19 years, the nickel mine port inventory has returned to the momentum of rising mineral prices and the profit space of high nickel pig iron is gradually tightening.

Since the beginning of May, the Philippine nickel mine has gradually resumed shipment, and the net consumption of China's nickel mine port inventory has been alleviated. At present, the price of nickel ore has exceeded the high price after the ore ban last year, but from the recent trend chart of nickel iron price or the inquiry price of steel mills, we can see that the price of high nickel pig iron has not risen synchronously with the price of nickel. As a result, in the case of rising mineral prices, profits have changed from the previous rise to the current deviating trend, and the iron mills' willingness to buy high-priced ore is worse than that of the same price last year. Under the pressure of high cost and low profit, manufacturers in some areas will gradually withdraw. In addition to the withdrawal of high-cost capacity, there was also the emergence of new capacity during the year.

It is estimated that China's NPI output will be negative in 2020.

China's NPI production increased to 580000 nickel tons in 2019, with the decline of high profits and environmental impact, superimposed by the increase in the release of new capacity, a year-on-year growth rate of 28%.

After Indonesia's mining ban took effect in 2020, China's NPI fell into a shortage of raw materials. Based on the current capacity survey, it is estimated that China's NPI production will drop sharply to 490000 nickel tons.

Analysis on the balance of supply and demand of laterite Nickel Ore in China in 2020

Without considering the stock demand, there will be a surplus of 56000 tons of nickel ore at the end of 2020. However, the Philippines has a low shipment volume affected by the rainy season from November to April next year, which is difficult to meet the reserve demand of domestic iron mills. It is expected that there will be a large-scale production reduction in domestic iron mills in early 2021.

The initial clearance of domestic production capacity has gradually begun in the second quarter, but a large number of new production capacity has been released in the third and fourth quarter, and the volume and speed of domestic ironworks are not as fast as those put into production, and the annual output decline is limited.

Analysis of supply and demand of Nickel Pig Iron Market between China and India in 2020

In 2020, Indonesia's NPI production may increase to 580000 nickel tons, an increase of 64%. The growth rate of total global nickel pig iron production will drop to 15%.

In 2020, Indonesia's NPI production ushered in explosive growth, with the total expected to increase to 580000 nickel tons, mainly supplied by Indonesia's Castle Peak and Delong.

Global NPI production projects are concentrated in China and India, and China's production is expected to be reduced to 490000 nickel tons in 2020, with overall growth falling to 15 per cent.

Indonesia's NPI market share surpassed China's to 54% in 2020

In 2020, Indonesia's market share of NPI surpassed that of China, but the main consumer was still China. Indonesia's market share increased from 38 per cent in 2019 to 54 per cent in 2020. Realize the change of supply pattern of high nickel pig iron market.

The economy of NPI is better than that of other nickel raw materials.

High nickel pig iron is more economical than electrolytic nickel and scrap stainless steel, and basically maintains a discount state in 2020, but the economy of imported nickel iron fluctuates greatly, with a discount of US $1500 in the first quarter of 2020, but Feni is limited by production capacity, the import volume is stable, and the supply is difficult to have an upward trend for the time being, so high nickel pig iron as an economical and superior nickel raw material, there is still a lot of room for development.

Development trend of raw material proportion of stainless steel and nickel

Demand of stainless steel and high nickel pig iron in China and India in 2020

The supply pattern of low-nickel pig iron is not affected by the ore ban in Indonesia, most of the low-nickel high iron ore comes from the Philippines, and the projects put into production in Indonesia do not include low-nickel iron, so we do not calculate low-nickel pig iron in the balance.

In 2020, the global total supply of high-nickel pig iron is 990000 nickel tons, while the total demand for stainless steel nickel iron in 2020 is about 952000 nickel tons, so by the end of 2020, the surplus of high-nickel pig iron will reach 38000 nickel tons.

In such a surplus range, it is difficult for the price of high nickel pig iron to rise in the fourth quarter. However, due to the shortage of nickel mines mentioned above and the support of high ore prices, the downward speed of high nickel pig iron may slow down, and the price range of high nickel pig iron this year is expected to be 880tel 960 yuan / nickel point (including factory tax).

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