Singapore 07/09/2016 - Jinchuan Group kept its nickel production above 11,000 tonnes but below 12,000 tonnes again in September - a level it has maintained for several months due to unattractive prices and tight ore supply, a company official told FastMarkets.
Output at China's largest nickel producer is down from around 13,000 tonnes in April, which itself was down 500-1,000 tonnes from March.
"Ore supply is tight but we do have some inventory. The main reason now is nickel prices are weak and we are not willing to produce more," the official said, adding that current nickel prices are loss-making for producers, be they miners or smelters.
Prices would probably need to hold above $11,000 per tonne for the company to see any economic benefits from lifting production, he said.
In China, other than Jinchuan and Xinjiang Nonferrous, almost all of China's electrolytic nickel producers have shut, Jinchuan chairman Yang Zhiqiang said last month.
Since 2015, around 65 percent of nickel producers with costs of above $10,000 per tonne have closed due to losses, he noted.
The tight supply of nickel ore due to production stoppages among sulphide ore producers in countries such as Australia and Brazil resulted in a decline in Jinchuan's nickel output since the second quarter of this year.
One of its suppliers, Australia's Panoramic Resources, ended a concentrate sales agreement with the company after it decided to suspend operations at its Savannah mine at the start of this year. The mine was subsequently put into care and maintenance late in May.
Nickel demand was weak in August but is likely to improve in the peak demand period of September-October, the official said. Orders have already picked up so far in September, he noted.
Jinchuan produced around 150,000 tonnes of nickel last year; output this year is likely to be 10,000 tonnes lower, according to the official.
LME three-month nickel was last at $10,210 per tonne on Wednesday, up $100 from Tuesday's close.