Posted on 28 Aug 2020
China’s imports of stainless steel and nickel pig iron (NPI) from Indonesia rocketed in July, with those of the former surging by a spectacular 443.6% on year to 141,000 tonnes while those of the latter increased by a comparatively pedestrian 74.6% to 201,822 tonnes, according to data from Chinese General Administration of Customs (GACC). Last month, Indonesia supplied 74.2% of Chinese imports of stainless and 75.6% of its NPI imports, the data showed.
The increases are largely a consequence of Chinese firms setting up their own stainless and NPI facilities in Indonesia over recent years and re-exporting production back to China, Mysteel Global was told. “The (Chinese) enterprises built their own capacity in Indonesia to save on their raw materials costs, especially when Indonesia started reducing its nickel exports to China,” a Shanghai-based market insider said to explain the large on-year increases.
This has come as little surprise, as China, being the only country in the world that has its economy back to normality, has been buying a lot of nonferrous and ferrous commodities from the other countries, according to various market sources. The country became a net import of aluminium products in July, for example, the first time in 11 years, as reported.
He noted that companies that had invested in steel plants and smelting lines for NPI in Indonesia usually import the output for use in their own production of finished steel in China, so the Indonesia-origin steel products are mainly semis. “The country has abundant raw materials supplies that largely reduce stainless production costs,” he emphasized.
In July, China’s imports of semi-finished stainless from Indonesia reached 122,295 tonnes, accounting for 86.8% of China’s total stainless steel imports from Indonesia, a more than 20-fold increase from the 5,619 tonnes China imported in July last year, the data showed.
Apart from stainless, Indonesia had been China’s largest nickel ore supplier before curtailing exports of these starting in 2014 and officially banning the business in January this year.
To help boost the national economy and provide more job opportunities, Jakarta was hoping to encourage overseas investment in its resources mining and processing sectors, especially its rich laterite nickel reserves, Mysteel Global understands.
Major Chinese stainless producers including Tsingshan Holding Group and later, Jiangsu Delong Nickel Industry Co, have both built NPI and stainless plants in Indonesia, producing a combined 1.07 million tonnes of stainless over the first half of 2020, as reported.
Nickel ore prices in China are firming now on tight availability, after the Philippines became the only large provider of these feeds to China, Mysteel Global noted, with the result that the smelting costs for NPI for Chinese producers have risen.
As of August 27, the price of 1.5% Ni content concentrates from the Philippines had increased to Yuan 476/t ($69.1/t) including 13% VAT in East China, higher by another Yuan 29/t on week and refreshing the all-time high since Mysteel commenced the price assessment in February 2017.
Moreover, although China had imposed anti-dumping duties on Indonesia’s stainless semis and hot-rolled coils starting 2018, as reported, the relatively high Chinese stainless prices currently can cover the AD penalties, the Shanghai source said.
The price of 304/2B 2mm stainless cold-rolled coil in Wuxi, a major stainless steel trading hub in East China’s Jiangsu province, averaged Yuan 13,976/tonne including the VAT last month, Yuan 41/t higher than the average over this year’s first seven months, Mysteel’s database showed. And the prices continued to increase to an eight-month high of Yuan 15,150/t as of August 27, up by a large Yuan 1,050/t on month.
Written by Zhiyao Li, lizy@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
Source:Mysteel Global
