The 18th International Nickel & Chrome Products Summit, held by CNFEOL in Wuxi, Jiangsu in early-June, marked Roskill’s return to the post-COVID-19 conference scene. Unsurprisingly, the central focus of discussion at the conference, and between delegates, was the effect of the COVID-19 outbreak on the nickel, chromium and downstream stainless steel markets. Some of the key take-aways from the summit for Roskill’s attending analysts Yiwei Yin and Tong Tong are detailed below.
Following the re-implementation of its ore export ban, Indonesia has focused on developing domestic nickel pig iron (NPI) capacity. Roskill was interested to learn the progress of several key Indonesian NPI projects during the conference. Jiangsu Delong Nickel Industry’s 2nd stage project was initially expected to start up 31 new furnaces in 2020. To date, 16 furnaces have started running and, while the rest of the furnaces have been finished, only one is in operation due to electricity supply issues. Meanwhile, Tsingshan Group’s Morowali and Weda Bay (JV with Eramet) projects both have 50% of their newly installed furnaces operating, with the remainder expected to be online by Q3 2020. Output of NPI from Indonesia swelled by 30% y-o-y in Q1, as existing and new capacity was ramped up, partly to feed Chinese stainless steel mills facing shortages of domestic NPI in 2020, as well as supplying Indonesian demand.
In China, the latest data from zljsteel show that Chinese NPI production totalled 211.7kt between January and May 2020, and there’s expectation locally that full-year output will reach 440-450kt. This total would mark a fall of around 20% y-o-y. A 15% y-o-y decline in Q1 was exacerbated by weak stainless steel demand and high costs at Chinese smelters. The suspension of nickel ore mining and shipping operations in the Philippines, due to national lockdown in April and May, has also negatively impacted Chinese NPI producers.
Roskill’s latest Nickel: Outlook to 2029, 16th Edition report was published in April 2020; for more information or to subscribe, click here.
There is a focussed interest on the impacts of COVID-19 on supply coming from South Africa, which accounted for 70% of Chinese chromium ore imports in 2019. South Africa has been the main growth source for Chinese ferrochrome plants, which have targeted chromite fines. Supply volumes to China were relatively unaffected over March and April, but declined in May under South African lockdown regulations and, moving forwards, remain subject to intermittent suspensions as the lockdown restrictions are eased.
Ferrochrome furnaces in China, especially in Inner Mongolia, are facing stricter regulations being imposed with regards to furnace size and process technologies used. These include measures to improve the electricity supply in Inner Mongolia, although this may lead to erosion of preferential prices.
Roskill will publish its NEW Chromium: Outlook to 2030, 16th Edition report later this month; for more information or to subscribe, click here.
In the run-up to Chinese New Year, stainless steel mills built up their stockpiles in an effort to boost prices, which was effective, and the material was subsequently shifted to traders. However, stockpiles are starting to build again following a relatively rapid recovery in steel mill output after the easing of lockdown measures, against a backdrop of weak demand from markets such as real estate and vehicle manufacture. This is weighing heavily on spot market prices. Furthermore, the situation looks set to deteriorate as the economic climate in China worsens and unemployment rates tick up, as the COVID shockwave reverberates around some of China’s key export markets.