YICHANG, China, Nov 6 (Reuters) – A ban on nickel ore exports from Indonesia will sharply reduce top buyer China’s output of stainless steel raw material nickel pig iron (NPI) and have a knock-on effect on production of the corrosion-resistant metal itself, analysts said on Wednesday.
Indonesia, the world’s biggest miner of nickel ore, has brought forward a ban on exports to the start of 2020, prompting a scramble for supply before it takes effect.
As it looks to process more resources at home, Indonesia’s own NPI production – chiefly from projects operated by Chinese companies including Tsingshan Holding Group – could surge well beyond China’s.
“There are so many developments ongoing or proposed in Indonesia that the potential growth of NPI is mind-blowing,” said Andrew Mitchell, head of nickel research at Wood Mackenzie. “We have already seen it grow from next to nothing in 2014 to an estimated 500,000 tonnes or so by 2020.”
Mitchell, speaking at the China International Nickel and Cobalt Industry Forum in Yichang, sees China’s NPI production also coming in at 500,000 tonnes next year, down 13% from an estimated 575,000 tonnes in 2019 because of lower ore supply.
“This could constrain Chinese stainless steel production. I think there is a real risk around whether … we will see production cuts in China,” Mitchell added.
China’s stainless steel output is set to rise by 13% this year to around 30 million tonnes, according to Xu Aidong, chief nickel analyst at Chinese research house Antaike, who sees output climbing by a slower 4% in 2020.
Xu also forecasts China’s NPI output will drop to around 500,000 tonnes next year, believing it will be hard for new projects to launch for a lack of ore, and puts Indonesia’s 2020 output at a higher 550,000 tonnes.
Combined, the two countries could account for 49% of global NPI production this year and 51% in 2020, she added.
Mitchell, meanwhile, believes any dent in China’s NPI production in 2020 will be dwarfed by the impact the following year, since some Indonesian ore will continue to arrive in the weeks after the ban takes effect, sustaining production.
“So it’s only by 2021 that we see a significant decline – and at that point it falls to about 340,000 tonnes.”
Ricardo Ferreira, director of market research and statistics at the International Nickel Study Group, put China’s nickel ore stocks at around 12.3 million tonnes as of Oct. 18, down from 17 million tonnes at the end of 2018. (Reporting by Tom Daly; Editing by Dale Hudson)
Post time: Nov-07-2019