Singapore 31/03/2016 - Nickel output at Jinchuan Group is set to decline from the second quarter due to a shortage of nickel ore, a company official told FastMarkets.
Production stoppages at nickel sulphide ore producers in countries such as Australia and Brazil mean that China's largest nickel producer is "getting fewer raw materials now", the official said.
In January and February alone, at least four nickel miners - Brazil's Votorantim and Australia's Mincor Resources, Panoramic Resources and Mirabela Nickel, which operates the Brazil Santa Rita mine - announced the suspension of operations.
Panoramic has a concentrate sales agreement with Jinchuan that ends once the decision is made to suspend operations at Savannah indefinitely, the miner had said.
Jinchuan itself has stopped production at the West One District of its mining areas in China.
The decline in nickel metal output from the second quarter onwards at Jinchuan will come after an increase in production in March.
The company expects to produce around 13,500-14,000 tonnes of nickel in March, up from 11,500-12,000 tonnes in February, which takes its first-quarter production to 36,000 tonnes.
Nickel demand in March was stronger than in January and February, particularly with Chinese stainless steelmakers procuring more nickel metal in the month, the official said.
Market participants had reported stronger nickel demand from local stainless steel producers since the second half of January after stoppages at domestic nickel pig iron producers resulted in tight supply of high-grade NPI.
Other than limited availability of high-grade NPI, Chinese stainless steelmakers have also increased their nickel metal purchase due to low prices.
Late in November last year, Jinchuan - along with seven other Chinese nickel metal and NPI producers - agreed to cut production by at least 20 percent this year. Another 10 large medium- and high-grade NPI producers then said in December they will cut output by the same extent in 2016.
(Editing by Mark Shaw)