China is the largest nickel ore consumer in the world and has upped its consumption of nickel to produce stainless steel predominantly. This has resulted in average global nickel prices reaching a new high in August 2020. Also, stainless steel scrap prices are up backed by strong demand from China.
China consumes a total of 40pc of the global nickel orders which makes China strong enough to offset weakness in demand from other countries, said Fitch Solution in an interview with a Manila-based media channel.
The Phillipines is the largest exporter of nickel ore for China after Indonesia banned its export in early 2020. Fitch Solutions believes that nickel prices may reach $13,500/mt in 2020, as reported by the Manila-based media. As on September 8, the official three-month LME nickel settled at $15,132/mt up by almost 8pc from January and currently trading near its eight-month high level.
Market participants in India shared with Davis Index that demand for stainless steel scrap from China is supporting global prices at large. Prices of major scrap grades consisting of high nickel content are up by 13-14pc as of September first week from January levels. In August, scrap prices touched their 8-month high.
In India, demand for stainless steel scrap has also risen in August on the back of higher demand from home appliances, auto sector and construction sector. Indian importers shared this could be the pent-up demand of March-May when markets were idled. In China, however, economic growth is strong, their GDP growth for the quarter was up 2.3pc, construction sector and automotive sector growing rapidly and their central bank is aiding the economy via several monetary measure. This could result in nickel prices rising further in the future.