Chinese stainless steel futures rose more than 3% on Wednesday after the Philippines’ top producer and exporter of nickel ore, Nickel Asia Corp, suspended operations at one of its four mines due to an outbreak of the coronavirus.
Work at Nickel Asia’s Hinatuan mine in the country’s nickel mining hub, the Caraga region, has been suspended from Tuesday until Nov. 10 as a containment measure.
China’s reliance on nickel ore from the Philippines has increased this year after its main supplier of the material Indonesia in January temporarily stopped exporting unprocessed minerals.
But the supply of ore from the Philippines, which is used to make nickel pig iron – the raw material for stainless steel, has shrunk as miners struggle to keep operations at normal levels due to the pandemic and weather-related disruptions.
Stainless steel for January 2021 delivery on the Shanghai Futures Exchange closed 3.5% higher at 14,775 yuan ($2,204.27) a tonne. Nickel prices also rallied.
The Hinatuan mine closure could add to concerns over limited ore supply from the Philippines until early next year.
“As the rainy season approaches in the main nickel production areas of the Philippines, it is expected that the shipment volume of Philippine nickel ore may begin to gradually decline after November,” analysts at Huatai Futures said in a note.
FUNDAMENTALS
* Nickel’s spectacular rally over the last month, based on ore shortages and robust demand from China’s stainless steel mills, still has momentum.
* Iron ore on the Dalian Commodity Exchange rose 2.4% as investors awaited China’s economic blueprint, which will be laid out at this week’s Communist Party plenum.
* Iron ore on the Singapore Exchange advanced up to 1.2%.
* Shanghai rebar rose 1.4% and hot-rolled coil climbed 1.3%.
* Dalian coking coal slipped 0.7% but coke gained 0.3%.
Source:Reuters
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