Philippines nickel shipments to remain high this year - top miner

by Eric Onstad, Reuters

Posted at Apr 30 2015 09:39 AM | Updated as of Apr 30 2015 05:39 PM

LONDON - The Philippines' top nickel producer expects this year's ore shipments from the country to remain at similar levels to those that unexpectedly filled a gap in supply in 2014, weighing on prices.

Nickel ore exports from the Philippines soared last year, surprising many investors who had expected big shortages after Indonesia banned unprocessed ore exports.

Some analysts and investors have questioned whether the country can maintain its strong exports, but Koichi Ishihara, of Nickel Asia Corp, said on Wednesday that ore shipments are likely to reach 43 million tonnes this year, down only slightly from last year's 44 million tonnes.

"Middle-grade nickel ore is the main driver for the increase in exports and we estimate further growth in 2015," Ishihara told the Metal Bulletin Nickel Conference in London.

Exports of middle and high-grade ore jumped 176 percent last year to 24.3 million tonnes, added the marketing and procurement vice president at Nickel Asia, which is partly owned by Japan's Sumitomo Metal Mining Co 5713.T and is the Philippines' biggest nickel producer with four operating mines.

Benchmark nickel prices CMNI3 on the London Metal Exchange (LME) last year spiked more than 50 percent by May, but then gave up the gains as the Philippines boosted shipments and LME inventories rose to record peaks.

Nickel slid to a low of $12,205 a tonne this month, the weakest in nearly six years and down by about a fifth since the end of 2014.

Ishihara expects low-grade ore exports to decline this year but overall tonnage to remain largely flat.

Ore from the Philippines and Indonesia mainly supply China's nickel pig iron (NPI) sector, which is used in the production of stainless steel and as a cheaper alternative for refined nickel and ferro-nickel in China.

Healthy exports of ore from the Philippines will allow China's NPI sector to avoid the full impact of the Indonesian ban this year, another speaker told the conference.

Bullish nickel investors had counted on the NPI sector to be squeezed by a shortage of ore, helping to drive up prices.

If Philippine exports remain steady, that, together with inventories, would be sufficient to supply China's NPI sector, said Krizstina Kalman-Schueler, managing director of DMM Advisory Group.

Inventories were built up ahead of Indonesia's ore ban, but they have been declining steadily.

"The impact of the declining Chinese ore stocks will only be felt in 2016," Kalman-Schueler said.

High-grade nickel ore stocks at Chinese ports have run down to about 5 million tonnes from 20 million tonnes, Macquarie senior consultant Jim Lennon said.