Singapore 18/12/2015 - Production cuts by Chinese nickel metal and nickel pig iron (NPI) producers are expected to total 78,000 tonnes (nickel content) next year after more Chinese NPI smelters pledged to lower output, said Chinese metals research firm Shanghai Metals Market (SMM).
Earlier this week, ten large medium- and high-grade NPI producers had agreed to cut production by at least 20 percent next year, which SMM estimated to equate to around 13,000 tonnes of nickel metal content, Liao Rongrong, nickel analyst at SMM told Fastmarkets.
This will be on top of the production cuts announced by eight nickel metal and NPI producers in late-November. The eight producers which include Jinchuan Group had agreed to cut production by at least 20 percent next year, which SMM estimated to be equivalent to a reduction of 65,000 tonnes.
The overall production cuts may help firm nickel prices in the short-term, but the rebound is likely to be limited, said Liao.
“While domestic producers are cutting output, production expansions are continuing overseas,” he said. “Much still depends on stainless steel demand which remains weak,” he added. The stainless steel sector is the largest consumer of nickel accounting for 60-70 percent of total nickel usage.
The most active May nickel contract on the Shanghai Futures Exchange (SHFE) rose 490 yuan to 70,310 yuan per tonne so far on Friday. The SHFE nickel price has plunged by around 40 percent since May this year amid sluggish global stainless steel consumption and large nickel stockpile in the market.