Singapore 25/07/2016 - Production of around 10,000-20,000 tonnes per month (nickel contained) of nickel pig iron (NPI) in Inner Mongolia are likely to have been halted following environmental checks by government authorities, Beijing Antaike estimated.
The tonnage amounts to about half of the output in Ulanqab in Inner Mongolia, a nickel analyst at Chinese state-owned metals research firm Antaike told FastMarkets.
Production stoppages in Ulanqab, a major NPI production base in the country, reportedly started early last week following inspections by the country’s environmental protection bureau in six provinces including Inner Mongolia.
It is difficult to say how long the production stoppages could last - it depends on how fast the producers are able to meet environmental requirements made by the authorities, the analyst said.
The NPI production stoppages and concerns over mining disruptions in the Philippines have provided support to global nickel prices. The Shanghai Futures Exchange September nickel contract closed at 80,520 yuan on Monday, down 700 yuan from the previous day’s close. The contract had hit a near 11-month high of 84,070 yuan last Thursday.
SHFE nickel could undergo a near-term correction but support remains due to tight Chinese domestic NPI supply and the mining audit in the Philippines, Minmetals Jingyi Futures said in a report on Monday.
Chinese imports of nickel ore this year can be expected to be lower than last year due to the mining disruptions in the Philippines, the Antaike analyst said. Nickel ore imports from the Philippines were already down 24.4 percent year-on-year to 10.67 million tonnes in the first half of this year.
"With a shortened amount of time to stockpile nickel ore before the Philippine rainy season starts and the lower average nickel content in ore, Chinese NPI producers are facing challenges for its raw materials," Antaike said.
While Chinese nickel ore port stocks are still estimated at two months of consumption, the country needs to stockpile nickel ore to cover around six months of usage from the Philippines in the coming months before the rainy season at the latter starts, sources estimate. The rainy season typically starts from late in the year till March the following year.
(Editing by Mark Shaw)