Singapore 05/07/2016 - The Philippines’ plan to review mining operations in the country will support nickel prices but the actual impact on nickel ore supply will be limited, said Beijing Antaike on Monday.
Nickel prices on the Shanghai Futures Exchange and London Metal Exchange has seen support over the recent weeks from the mining rhetoric in the Philippines – the latest being its new mining minister Regina Lopez announcing plans to review all mining operations in the country for a month.
The review of mining operations in the Philippines will attract the focus of investors and help nickel price maintain its strength, the state-owned Chinese metals research firm said in its report.
The appointment of Lopez - a well-known environmentalist - to the country’s Department of Environment and Natural Resources in late June had sent Philippine mining stocks falling.
New Philippine President Rodrigo Duterte had promised also a "comprehensive review" of mining concessions in the country and warned he would cancel any projects causing environmental harm.
But Antaike noted that the actual impact on nickel ore supply will not be substantial - the mining operation review in the Philippines will reduce the Philippines’ nickel ore exports to China by only 1.5 million wet tonnes in 2016. Last year China imported 34.27 million wet tonnes of nickel ore from the Philippines, Antaike noted.
“But with the nickel market expected to enter a deficit this year, the move [in the Philippines] has given longs great confidence,” it said.
Earlier in April, the International Nickel Study Group (INSG) lifted its deficit forecast for the nickel market this year. It projected a 49,000-tonne deficit in the nickel market in 2016, an increase from its October forecast of a 23,000-tonne deficit.
The SHFE September nickel contract climbed to an 11-month high of 83,420 yuan on Monday. It was at 78,210 yuan when morning session trading finished on Tuesday, down 1,030 yuan on profit-taking.
The LME three-month nickel price surged to its highest in more than eight months above $10,400 on Monday, nearly 40 percent higher than the 2016 low of $7,550 hit in February.
It was last at $9,905 per tonne, down $290 on Monday's close so far on Tuesday on Select.