In May, China's NPI+FeNi imports amounted to 651,500 mt in physical content, down 9.96% MoM [SMM Analysis]

According to customs data, China's NPI+FeNi imports totalled 651,500 mt in physical content, down 9.96% MoM and 1.86% YoY. The metal content was 97,000 mt, down 8.19% MoM and 2.48% YoY.

The main decrease in total imports was concentrated in NPI whose imports amounted to 621,900 mt in physical content in May, down 11.5% MoM and 0.5% YoY. In May, Indonesian RKAB approval quotas increased, while the mining output remained weak. Indonesian cross-island nickel ore purchases and Philippine nickel ore procurement reached historical highs, alleviating the raw material shortage for NPI smelters, but the overall nickel ore increase was still limited. In May, Indonesian NPI production saw a slight increase. Additionally, as nickel ore approval accelerated, more Indonesian NPI was qualified for exports. Since NPI prices fluctuated upwards in May and overseas demand recovered, Indonesian NPI exports to China Taiwan, India, and South Korea increased, leading to a significant decline in exports to China. According to SMM, Indonesian NPI production continues to trend upward in June, but the total volume remains limited. With China entering the off-season for stainless steel consumption in June, Indonesian NPI exports to China are anticipated to continue to decline in June.

Regarding FeNi, the imports in May were 29,600 mt in physical content, up 44.6% MoM but down 23.6% YoY. The nickel content was 7,300 mt, up 60.7% MoM but down 19.3% YoY. The overall increase in May came from the Dominican Republic, New Caledonia, and Colombia. The imports from the Dominican Republic, mainly from Glencore, reached about 4,863 mt, close to its total FeNi flowing into China in Q1 2024. Glencore maintained a low operating rate due to current FeNi losses. It is expected that China's imports from Glencore will remain limited in the short term. In May, New Caledonia experienced a sudden geopolitical conflict. To mitigate its impact on future shipments, the shipments to China increased in the short term, with FeNi flowing into China up 3,799 mt compared to April. According to SMM, the current FeNi production in New Caledonia mainly focuses on fulfilling long-term contracts, affected by the conflict. It is expected that the total shipments to China will have a downward trend in the short term. In summary, FeNi imports may decline in June with weakening raw material demand from domestic steel mills.