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Nevertheless, imports during January and February were very strong, up 40% y/y despite still weak end-demand domestically and strong NPI production.

27 Mar 2013

LONDON (Commodity Online): Nickel prices in China have not moved up due to more than ample supply with expectations that Nickel Pig Iron (NPI) production would be higher, states a recent analysis by London based Barclays.

However, nickel demand in China has been improving with increased buying from the stainless sector, galvanizing and batteries, the report added.

It appeared there had been an increase in nickel stocks (ingots, briquettes and drums), though it received mixed reports as to whether there had actually been a net increase in bonded nickel stocks.

Nevertheless, imports during January and February were very strong, up 40% y/y despite still weak end-demand domestically and strong NPI production.

According to the feedback from meetings conducted by Barclays, part of the strength in imports was due to nickel financing just like other metals, with volumes depending on forex and price spreads.

Currently the arbitrage is now closed so import financing activity has slowed to a halt, but appetite remains to restart if the spreads become profitable again.

Hedging the metal isn’t as simple as for copper or zinc since nickel isn’t traded on the SHFE, but traders can quasi-hedge on the electronic platforms in China such as the Bohai Exchange and the Wuxi Stainless market.


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