Posted on 08 Dec 2020
China’s nickel market may become slightly oversupplied in 2021, with the major driver being the increased availability of nickel pig iron (NPI), according to Mysteel’s latest report presented at the 2021 Mysteel Ni-Cr-Stainless Steel-New Energy Annual Conference in Wuxi city, East China’s Jiangsu province on December 3.
According to Mysteel’s report, the total supply of NPI in the domestic market including imports will increase to around 1.1 million tonnes next year from the 983,800 tonnes predicted for 2020. At the same time, domestic demand for NPI will still be less than supply, the reported noted, though demand is still seen climbing to around 1.1 million tonnes from 978,600 tonnes in 2020. Mysteel calculates the oversupply will increase to 7,400 tonnes in 2021 from 5,200 tonnes this year.
Subsequently, the availability of metal nickel domestically will face a slight surplus in 2021 – predicted at 4,000 tonnes – from the deficit this year of about 7,100 tonnes.
Nevertheless, both the supply and demand of pure metal will still increase by 9% on year, with the former seen rising to 1.54 million tonnes and the latter to 1.537 million.
Regarding supply next year, most of the growth in NPI supply is expected to be in the import volume from Indonesia, Mysteel noted in the report. New NPI capacity that will commence production in Indonesia in 2021 – while the local demand there is still limited – may lead to large volumes of NPI flowing into China’s domestic market, the report said.
Nevertheless, domestic supply of NPI is likely to slip next year due to the limited nickel ore resources, Mysteel also predicted.
As for demand, consumption of nickel metal will also see some growth, mainly driven by the commencement of some new capacity among domestic stainless steel producers and from China’s battery manufacturing sector.
Meanwhile, the slightly faster growth in nickel supply in 2021 is expected to weigh on domestic nickel prices, with Mysteel anticipating that nickel futures prices on the Shanghai Futures Exchange will hover in the range of Yuan 90,000-125,000/tonne ($13,758-19,108) next year.
On December 3, the most-traded nickel contract on the SHFE for next February delivery was settled at Yuan 118,190/t, according to SHFE’s data.
Written by Victoria Zou, zyongjia@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
Source:Mysteel Global
