Risk of oversupply spreads as Indonesia resumes nickel ore exports
NETRALNEWS.COM reported that wariness over policy changes in two major nickel producing countries, Indonesia and the Philippines, is dragging the price of the metal down to 10 month lows. The risk of oversupply is spreading as Indonesian mining companies resume nickel ore exports after the government relaxed its export ban earlier this year.
The ban, which started at the beginning of 2014, was lifted with a 3.7 million tonne export allocation for two companies. On May 1, one mining company exported 50,000 tonnes of nickel, the main material in stainless steel, to China. Similarly, state owned Aneka Tambang, known as Antam, released its plan to export 150,000 tonnes by the end of this month.
As Indonesian exports are expected to increase, benchmark nickel futures for three-month contracts on the London Metal Exchange declined to USD 9,315 per ton on Friday, 20% below their recent high in mid-February. The price has been hovering at low levels since May 5, when it sank to USD 8,905, the lowest level since the end of June last year.
A policy shift in the Philippines, another major producer, is also weighing on prices. Earlier this month, the Philippine parliament rejected the appointment of Regina Lopez, the environment minister, who has been tough on the mining industry.
During her less than one year in office, she ordered an audit of the country's nickel mines, and then to shut down about half of them. Mr Andrew Franklin Hotama and Gregorius Gary, analysts with Bahana Securities noted in a report that “This would affect up to 150,000 tons of nickel or 48% of the country's total supply, if Lopez were appointed as environment minister,"
How many mines could resume operation under her successor Roy Cimatu, appointed by President Rodrigo Duterte, is still unclear. The market, however, expects the new minister's stance on mines to be more relaxed compared with that of Lopez.
Nonetheless, nickel demand remains strong in countries including major importer China, regardless of price fluctuations caused by policy changes by producers in Southeast Asia. For 2017, global shortage of the metal is expected to reach 46,700 tons according to the International Nickel Study Group.
Source : Netral News.com