Singapore 26/04/2016 - Sales at Eramet Nickel fell 39 percent year-on-year to 118 million euros ($133 million) in the January-March quarter, the French nickel and manganese producer said.
Its nickel sales volume which includes ferronickel and nickel matte slipped 7.9 percent year-on-year to 12,392 tonnes during the quarter, the company said last Friday.
Eramet’s output of the same products, however, rose 5.1 percent year-on-year to 13,755 tonnes in January-March.
Global stainless steel had remained stable in the first quarter but the slowdown in Chinese growth and high level of nickel stocks led to extremely low nickel prices in early 2016, it said last Friday.
The average London Metal Exchange nickel price in the first quarter was at $3.86 per pound, and at this price level, over 70 percent of the nickel industry is estimated to be producing at a loss, Eramet said.
But it noted that the wide-scale destocking of nickel ore since 2014, production cuts announced by several nickel producers - including a decrease in Chinese nickel pig iron production - and slightly positive growth in nickel demand in 2016 might contribute to the beginning of a market rebalance.
Demand for ferronickel was especially strong in the first quarter, it added.
Overall sales in the Eramet group fell 14 percent year-on-year to 666 million euros in the first quarter.
The historically low nickel and manganese price in the first quarter will lead to a decline in the company’s first-half operating income compared to the same period in 2015, Eramet warned.
The pursuit of cash-flow protection measures remains a priority for the group, particularly at Société Le Nickel (SLN), Eramet’s New Caledonia nickel smelter, it said.
Cost reduction and improved productivity at SLN has resulted in a ten percent improvement in SLN’s average cash cost in the first quarter compared to 2015’s average, it noted.
Eramet had said on the same day that it will acquire Mitsubishi Corp’s 30-percent and Pacific Metals’s 3.4-percent interests in Strand Minerals, which owns 90 percent in PT Weda Bay Nickel in Indonesia.
Eramet will become a 100-percent shareholder of Strand thereafter, with its net debt to increase by nearly 100 million euros as a result of the transaction.