China nickel importers strike term deals with eye on Indonesia ore ban
* Nickel-pig-iron output unclear on Indonesia's ore export ban
* Refined nickel importers make flexible plans on term shipments
* China nickel demand at 820,000 T in 2014 vs 780,000 in 2013 - Antaike
By Polly Yam
HONG KONG, Dec 5 (Reuters) - China's refined nickel importers are negotiating 2014 term deals with suppliers that give them the flexibility of adjusting shipment volumes depending on how Indonesia's proposed ban on ore exports turns out.
The Southeast Asian nation has said it will ban unprocessed ore exports from January 2014, but is rethinking it in order to keep export revenues flowing in. On Thursday lawmakers rejected a government bid to water down the planned ban.
A ban on ore exports from next month will boost China's demand for refined metal by hurting output of cheaper substitute nickel-pig-iron. Higher imports of spot refined nickel by the world's biggest user of the metal could support global prices that have fallen nearly 20 percent this year.
Some 60 percent of nickel consumption in China is covered by nickel-pig-iron, a low-grade ferro-nickel used for stainless steel production. So widespread is its use now that China has become the world's biggest and dominant producer of nickel-pig-iron.
Most of the raw material for making the ferro-nickel comes from Indonesia. The Southeast Asian country provided 55 percent of China's 57 million tonnes of nickel ores and concentrate imports in January-October, the bulk of which was laterite ore used to make nickel-pig-iron, according to analysts.
Given the uncertain situation about Indonesian exports, importers of refined nickel are negotiating flexible term shipments with suppliers for 2014, traders said.
An executive at a Chinese importer said his firm had asked a big supplier to ship between 200 tonnes and 500 tonnes per month in 2014, compared to 300 and 400 tonnes this year. The firm will decide the monthly imports according to spot demand.
Suppliers had offered premiums of about $160 per tonne over the London Metal Exchange nickel prices for smelting grades of refined nickel for 2014 term shipments to the firm, compared to $140-$180 in 2013, he said.
"We have booked some 2014 term shipments at premium of $160 per tonne which we don't think is high," the executive added.
For their part, nickel-pig-iron producers in China have been boosting their inventories of laterite ore in anticipation of the Indonesian ban. They and other importers have built at least 2.5 million tonnes of ore stocks in October and November.
The stocks in the seven largest Chinese ports rose 16 percent to 18.92 million tonnes in end-November from 16.38 million tonnes in end-September, data from information provider Umetal.com showed.
Stocks in all ports in China should be more than 23 million tonnes of laterite ore, said Wang Lixin, analyst at Umetal.com.
The estimated stocks would contain 345,000 tonnes of nickel based on average metal content of 1.5 percent in ore imports.
"Producers have been building ore stocks ahead of Indonesia's planned ban in January," said a manager at a nickel-pig-iron producer.
The high ore stocks would support strong production of nickel-pig-iron in the first half of 2014 and the production would slow in the second half as ore imports fall, said Xu Aidong, chief analyst at state-backed research firm Antaike.
China's nickel output may surpass 720,000 tonnes of metal in 2014 compared to 680,000 tonnes expected this year, Xu estimated. Of the 2014 output, about 500,000 tonnes would be metal from nickel-pig-iron versus 470,000-480,000 in 2013.
Nickel use in China is likely to surpass 820,000 tonnes of metal in 2014 as stainless steel output rises to cover higher demand from infrastructure and building projects, compared to about 780,000 tonnes expected for this year, Antaike forecast. (Editing by Muralikumar Anantharaman)
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