China nickel importers strike term deals with eye on Indonesia ore ban – by Polly Yam (Reuters U.S. – December 5, 2013)

HONG KONG, Dec 5 (Reuters) – China’s refined nickel importers are negotiating 2014 term deals with suppliers that give them the flexibility of adjusting shipment volumes depending on how Indonesia’s proposed ban on ore exports turns out.

The Southeast Asian nation has said it will ban unprocessed ore exports from January 2014, but is rethinking it in order to keep export revenues flowing in. On Thursday lawmakers rejected a government bid to water down the planned ban.

A ban on ore exports from next month will boost China’s demand for refined metal by hurting output of cheaper substitute nickel-pig-iron. Higher imports of spot refined nickel by the world’s biggest user of the metal could support global prices that have fallen nearly 20 percent this year.

Some 60 percent of nickel consumption in China is covered by nickel-pig-iron, a low-grade ferro-nickel used for stainless steel production. So widespread is its use now that China has become the world’s biggest and dominant producer of nickel-pig-iron.

Most of the raw material for making the ferro-nickel comes from Indonesia. The Southeast Asian country provided 55 percent of China’s 57 million tonnes of nickel ores and concentrate imports in January-October, the bulk of which was laterite ore used to make nickel-pig-iron, according to analysts.

Given the uncertain situation about Indonesian exports, importers of refined nickel are negotiating flexible term shipments with suppliers for 2014, traders said.

An executive at a Chinese importer said his firm had asked a big supplier to ship between 200 tonnes and 500 tonnes per month in 2014, compared to 300 and 400 tonnes this year. The firm will decide the monthly imports according to spot demand.

Suppliers had offered premiums of about $160 per tonne over the London Metal Exchange nickel prices for smelting grades of refined nickel for 2014 term shipments to the firm, compared to $140-$180 in 2013, he said.

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