China, Japan scramble for nickel after Indonesian ban – by Polly Yam and Yuka Obayashi (Reuters U.S. – May 8, 2014)

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HONG KONG/TOKYO, May 8 (Reuters) – Nickel buyers in China and Japan are scrambling to secure supplies as soaring prices and a fear of shortages boosts demand for both refined metal and long-term ore contracts.

The price of nickel ore from the Philippines has more than doubled since late February, as supplies have dried up from rival producer Indonesia, previously the world’s biggest exporter.

China, the world’s largest nickel consumer, has recently increased imports of refined metal to help meet higher seasonal demand, say trader and importers, as the price of commonly used alternative nickel pig iron has soared since the Indonesian ban took effect in mid-January.

Nickel demand may get a further boost from stockpiling by China, with refined imports due to start arriving at State Reserves Bureau warehouses before the end of June, sources with knowledge of the matter said.

“Everybody in China is bullish nickel and everybody is hoarding nickel of any kind,” commodities strategist Ivan Szpakowski of Citi in Shanghai said. China, the world’s largest steelmaker, has turned to laterite nickel ores in recent years to produce nickel pig iron, a cheap, low-grade ferro-nickel – an alloy of iron and nickel – used in stainless steel.

Japanese stainless steelmakers rely mainly on ferro-nickel producers and scrap for content, while other steelmakers use refined nickel for speciality products.

Nickel users and traders in both countries built up substantial stockpiles of ore ahead of the Indonesian ban that should last major users until the end of the year, say traders and industry watchers, but long-term supply is an issue.

PRICES FLY

Spot Philippine ores with 1.9 percent metal content rose more than 120 percent between late February and end-April, trading at $114 per wet tonne CIF China last week, traders said.

“Spot ore prices have soared this year as we compete with Chinese makers to secure the Philippine ores,” said a senior official at Japanese ferro-nickel and stainless steel maker Nippon Yakin Kogyo Co Ltd..

The price of nickel pig iron with 10-15 percent metal content has risen about 20 percent since early March to about 1,350 yuan per 1 percent of metal.

This makes it more expensive than spot refined nickel prices NI-1-CCNMM in China, which have risen nearly 40 percent this year to about 131,750 yuan per tonne.

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