Chinese nickel ore imports plunged in July as but Macquarie Research reports that concurrently demand was booming. One of the main highlights of the July Chinese trade data was the sharp fall in Chinese nickel ore imports. Total ore and concentrates imports fell 76.5% year-on-year to only 530,983 t in July, and the lowest monthly figure since December 2006. However, year-to-date imports from the three main countries supplying laterite nickel ores for nickel pig iron production were down only 1.1% year-on-year in the first seven months of the year. Within that flat picture was a major shift from Filipino and New Caledonian ore to Indonesia ore with imports from Indonesia rising 56.9% year-to-date. Macquarie notes a number of points.
The switch to higher grade Indonesian ores reflects the reality that at current nickel prices, it is no longer economic to process the low grade Filipino ores of 1.0-1.25 % Ni that were initially brought into Chinese from old waste stockpiles. Indonesian ores average 1.5-1.8% Ni and can be processed in Chinese electric arc furnaces and blast furnaces to produce higher grade nickel pig iron than the lower-grade ores.
There was a massive build in nickel ore stocks in Chinese ports until mid-June with ore stocks peaking at close to 9 Mt, having rises by around 3 Mt since the start of 2008. Macquarie calculates Chinese nickel pig iron production as the recoverable nickel content of imports adjusted for port stock changes. On this basis, nickel pig iron production was 54,000 t in the first seven months of 2008.
Assuming Macquarie is correct about the nickel pig iron production, then calculated apparent nickel consumption in China rose to an incredibly high 245,500 t in the first seven months of this year, up 32.8% year-on-year. Macquarie calculates Chinese refined nickel imports and exports as the nickel content of cathode, ferronickel, power and oxide.
Such a large rise in apparent demand seems in excess of ‘real’ consumption with reports of stainless steel production being up by around 15% year-on-year over this period. On the face of it, it does suggest that some stockbuilding of primary nickel has taken place. In any case, the massive rise in Chinese imports (of 30.1% year-on-year) when combined with the falling global nickel price suggests that non-Chinese nickel demand must have been especially weak in the first seven months of this year.