1 October 2024 – Due to the ongoing nickel ore shortage in Indonesia, China’s largest producer is cutting its ferronickel production. And how is the global raw material situation for stainless steel developing and what impact will this have on the fourth quarter of 2024?
Nickel shortage: China’s largest nickel producer cuts production
China’s largest nickel producer Tsingshan has reduced production in Indonesia due to a continuing ore shortage caused by delays in the approval of mining quotas.
Scarce ore availability drives up production costs
The shortage caused by slow licensing has increased production costs, forcing Indonesian smelters to import ore from the Philippines, the second largest nickel producer. Within a year, the volume of imported Philippine ore had increased almost tenfold.
The exact extent of the production cuts by Tsingshan, which operates in the Morowali and Weda Bay industrial parks in Indonesia, was not disclosed.
45% price increase for Indonesian ore
The limited availability of Indonesian ore has caused prices to skyrocket by more than 45% since the end of 2023. Philippine ores have risen in price by almost 30% in the same period. The price of Indonesian NPI (nickel content 10-16%) has risen by more than 8.4%.
Positive outlook for stainless steel in Q4 2024
Even if some media and associations continue to try and talk down the mood on the European steel and stainless steel market, surveys in particular are likely to paint a distorted picture. Especially when the survey creators provide little information about the actual structure of their questions. After all, the right questions can achieve the desired results. But is everything really that bad? Or is this just another tale of the big steel companies hunting for new subsidies at the expense of domestic SMEs?
Raw material situation for stainless steel
Scrap and stainless steel scrap are in short supply not only in Europe, but worldwide. In the EU alone, the shortfall in stainless steel scrap is likely to have reached record levels of up to two million tonnes since 2021, after EU stainless steel manufacturers increased the scrap and recycling share in their EAF to over 90%. This can be attributed in part to the continued high prices for stainless steel scrap, but also to the increased imports of nickel pig iron and stainless steel slabs into the EU.
Scrap is becoming more and more desirable
When it comes to scrap, carbon steel manufacturers have also recently voiced their concerns that the increasing switch to EAF will lead to an increasing shortage of other types of scrap. There have also recently been renewed calls in southern Europe for an export ban on scrap.
Ore scarcer than expected
As already mentioned at the beginning, the industry giant Tsingshan has announced that it will reduce the production of nickel pig iron due to a shortage of nickel ore. The prices for nickel ore from Indonesia are high and are thus driving up the costs for NPI production and therefore also for Asian stainless steel manufacturers.
Overall, producers have shown in recent weeks and months that they are not prepared to sell below production costs. They prefer to shut down plants and switch off EAF or RKEF-AOD.
The overall trend in nickel prices since the beginning of September 2024 has been pointing upwards for several weeks now. Prices on the LME have improved by more than 8% to currently almost USD 17,800/MT.
Europe with very limited stainless steel capacities
If the very limited production capacities of Western stainless steel manufacturers are taken into account and economic areas such as the European Union can only cover their stainless steel requirements through imports, this tends to point to a stabilisation of stainless steel prices and room for price increases.
Overall, this shows that the situation is generally favourable for price trends in the coming months.
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Disclaimer: Many things here represent our opinion. Others are information from the Internet. We can therefore never claim to be correct or complete. And never base a business decision solely on the news you receive from us.
