Singapore 28/12/2015 - The Chinese Nonferrous Metals Industry Association (CNIA) expects global nickel metal prices to remain low in 2016 amid a grim outlook for Chinese stainless steel production and demand next year.
The London Metal Exchange nickel prices is expected to average $8,000-12,000 per tonne in 2016, the association forecasted in a statement last week.
China’s stainless steel production and consumption are expected to decline next year due to “supply-side reforms” which will gradually eliminate capacities in the stainless steel industry, said CNIA.
This year, China’s stainless steel production and consumption are expected to be flat, with the country’s net stainless steel exports decreasing 13.7 percent and stock levels rising by 13.5 percent, it said.
The pessimistic view on nickel prices is despite ongoing production cuts in the Chinese nickel industry.
Chinese electrolytic nickel production cuts are currently at 8,700 tonnes per month, with nickel pig iron (NPI) production falling 18 percent year-on-year in January-November this year, CNIA estimated.
Production cuts among Chinese NPI and nickel metal producers are expected to fall by 20 percent next year, but the start-up of new capacity overseas, like in Indonesia, will mitigate the cuts in China, it added.
A group of eight leading Chinese nickel and NPI producers had agreed to cut production by at least 20 percent in 2016, while a separate group of around ten NPI producers also pledged to reduce output by the same extent next year.
The LME three-month nickel contract had closed at $8,620 on December 24, $35 lower than the previous day’s close. The LME is closed on Monday for a United Kingdom bank holiday.