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|China NPI 2012 Output Likely To Drop By 10% YoY|
|= Indonesia's export ban on nickel ore is near =|
It is becoming more likely that China's output of nickel-Pig-Iron (NPI) during 2012 will drop, by more or less 10% compared to 2011, with a possibility that 2013 output of NPI will be further less by 20% than 2011 output.|
NPI production in 2011 is at this moment estimated 220,000 -240,000 tons, up by 35 - 40% from 2010.
The sharp increase in the output was supported by a large volume of ore imports mostly from two suppliers. China imported 48.25 million tons of nickel ore in 2011 of which 25.71 million tons from Indonesia (53%) and 22.12 million tons from the Philippines (46%). However, the situation may drastically change in 2012, i.e. in the worst case, imports from Indonesia, the biggest supplier of the ore to China becomes zero from May 2012.
Indonesian government established earlier a law to ban exports of nickel ore from 2014, but enforcement of the law was recently brought forward to May 2012 by a decree signed by the minister of Energy and Mineral Resources of Indonesia. At this moment it is still premature to figure out whether the law will be enforced in May as the government intends, because a new organization called APEMINDO (Indonesian Mineral Producers Association) is opposing to intended enforcement and petitioning for cancellation of the law and/or postponement of the enforcement in the parliament's hearings, saying that hasty implementation of the ban will involve loss of revenue of US$4.5 billion and 300,000 jobs. However, trend appears that the ban (or export tax of 25% as a substitute) will be anyway implemented sooner or later. Bauxite is said to be also subject to the export ban.
Decrease in production of NPI in China will of course affect nickel supply and demand situation over the world. It was forecasted earlier that supply and demand of nickel in 2012 would be an oversupply of annually 40,000 - 50,000 tons mainly due to the start-ups of new projects, but if the NPI production declines by 10% this year, equivalent to 20,000 - 25,000 tons of nickel content, the forecasted oversupply will have to be somehow reviewed.
The abundantly stocked nickel ore at Chinese ports and accumulation of the stocks at producers' yard are probably only enough for NPI production during the first half of 2012, but things could be fairly different in the second half with possibilities of forced curtailment of NPI production from shortage of ore.
|last modified : Tue 24 Apr, 2012 [10:48]|