China's Nickel Ore Inventories Set New High

SHANGHAI, July 1 (SMM) -- Up to July 1st, China's total nickel ore inventories in Lianyungang, Rizhao, Lanshan, and Tianjin ports have reached 10.01million mt, setting a new record high. 

China's NPI industry experienced rapid development since 2006, driving up demand for laterite nickel ore accordingly. In this context, China has imported a large amount of nickel ore, causing constant growing inventories of nickel ore at domestic ports. Demand for NPI reduced significantly during the financial crisis in 2008 due to significantly reduced demand from stainless steel sector. According to historic statistics, the lowest inventory level was at 6 million mt.

Profits for NPI producers increased in 2009 when nickel prices rebounded, and NPI industry vitalized again. However, purchases from stainless steel mills reduced with the coming of seasonal low demand period, causing sluggish consumption of NPI again. Prices of (1.6-1.7%) and (4-6%) NPI dropped sharply and many NPI producers with blast furnaces halted production, leading to slow consumption of (1.6-1.7%) and (4-6%) NPI. Producers with electric arc furnaces consumed limited nickel ore, also leading to slow consumption of nickel ore.  Large amount of previously-ordered nickel ore arrived at port in Q 2 after the end of rainy season in nickel ore origins, but nickel ore were shipped out at very slow pace, causing nickel ore inventories at ports quickly exceed 10 million mt, including 1.51 millin mt at Liangyungang, 3.6 million mt at Rizhao port, 2.2 million mt at Lanshan port and 3.6 millin mt at Tianjin port.

To contact the writer on this report: cracewu@smm.cn

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