- It's not that China isn't buying lots of nickel. It's just that it's buying lots of raw material, leaving the refined market undisturbed.
LONDON: China has bailed out the copper and aluminium markets by importing record amounts of the rest of the world's surplus metal. Not so the nickel market, however.
Chinese imports of refined nickel fell by 32% year-on-year to 130,700 tonnes in 2020. It was the lowest annual total since 2014.
This has not held back the London Metal Exchange (LME) nickel price, currently trading close to 17-month highs at $18,675 per tonne.
However, China's lack of import appetite is evident in abundant LME stocks, which stand at 249,846 tonnes, up from 156,000 tonnes at the start of 2020. It is also clear to see in the LME contract's loose date structure, the benchmark cash-to-three-month period closing out Wednesday at a $45 contango.
It's not that China isn't buying lots of nickel. It's just that it's buying lots of raw material, leaving the refined market undisturbed.
The driving force remains China's stainless steel sector, which is absorbing ever more Indonesian nickel pig iron (NPI).
But there are signs that growing demand from the battery sector is starting to make an impact on China's nickel trade landscape. A Chinese nickel sulphate supply squeeze may accelerate that shift.
It could, though, also trigger another reformulation of entire nickel supply chain.