Tsingshan helps drive record drop in LME nickel inventories
2019-10-10 11:59:01 [Print]
China's Tsingshan Holding Group was one of the main forces behind a record drawdown in London Metal Exchange nickel inventories last week, according to people familiar with the matter.
The company, the world's biggest stainless steelmaker, bought the nickel to secure supplies ahead of a looming ban on raw nickel ore exports from Indonesia, said the people.
While the LME's warehouse network is designed as a last-resort source for exactly this type of supply crisis, the scale of buying could raise concerns about a potential shortfall if the drawdowns continue. Some traders and consumers have been scrambling to pick up metal since early September, when Indonesia confirmed plans to bring forward its ban. But the move last week was surprisingly sharp -- the nearly 25,000 tons that left the warehouses was the biggest decline in the four-decade history of the nickel contract.
Tsingshan is working with financing banks including JPMorgan to take the metal off the exchange, the people said. Estimates for how much they bought range from 30,000 to 80,000 tons.
At Friday's spot price of $17,906 a ton, the value of the metal withdrawn last week is worth about $450 million. LME stockpiles have declined further this week, with inventories plunging by a record 8,166 tons on Tuesday.
The LME's record of orders show that another 75,000 tons of metal are scheduled to be delivered out. People familiar with Tsingshan's deals declined to specify how much more metal the company may be seeking to withdraw.
The company, the world's biggest stainless steelmaker, bought the nickel to secure supplies ahead of a looming ban on raw nickel ore exports from Indonesia, said the people.
While the LME's warehouse network is designed as a last-resort source for exactly this type of supply crisis, the scale of buying could raise concerns about a potential shortfall if the drawdowns continue. Some traders and consumers have been scrambling to pick up metal since early September, when Indonesia confirmed plans to bring forward its ban. But the move last week was surprisingly sharp -- the nearly 25,000 tons that left the warehouses was the biggest decline in the four-decade history of the nickel contract.
Tsingshan is working with financing banks including JPMorgan to take the metal off the exchange, the people said. Estimates for how much they bought range from 30,000 to 80,000 tons.
At Friday's spot price of $17,906 a ton, the value of the metal withdrawn last week is worth about $450 million. LME stockpiles have declined further this week, with inventories plunging by a record 8,166 tons on Tuesday.
The LME's record of orders show that another 75,000 tons of metal are scheduled to be delivered out. People familiar with Tsingshan's deals declined to specify how much more metal the company may be seeking to withdraw.
Nickel Ore Philippine 1.5%min CIF China
Unit:USD/mt
China refined nickel producers' operating rate statistics by province by month
Unit: %
