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There is at least a month-long queue to take nickel units out of Johor sheds, traders in Southeast Asia said this week, adding that the arbitrage window was still unfavourable for imports to China.
Metal Bulletin assessed premiums for 99.80% nickel briquettes at $10-15 per tonne on an in-warehouse Singapore and Malaysia basis.
For nickel full plates, premiums were assessed at $35-50 per tonne at the two locations on an in-warehouse basis.
From Tuesday October 20, Metal Bulletin is publishing weekly premium assessments for nickel briquettes and nickel full plates in Singapore and Malaysia.
“I heard there is a queue in Johor and, if you are to book now, it will be for an end of November shipment,” a trader in Singapore said.
“I was offered $50 for full plates, but it is not clear what is pushing offers up,” the trader added.
The market had reported a slight increase in premium offers earlier this month following stock cancellations.
There is also some talk that the cancelled stocks are being moved to Taiwan, possibly because of warehouse incentives.
“The cancelled stocks are likely headed to Taiwan,” another trader in Singapore said.
“The incentives offered in Taiwan have been pretty good recently,” another market participant said, confirming that the queue in Johor was indeed a month long.
“Taiwan is a strange location to park your nickel but it is probably for a future arbitrage opportunity,” a trader in Singapore said.
Traders pointed out that an incentive of at least $80 per tonne was needed to cover shipment costs.
Arbitrage Even though cancellations led to a slight uptick in premium offers this month, traders said they are still waiting for the arbitrage between London and Shanghai markets to open up.
“If you want to take nickel out of Johor, you have to wait until the end of November. However, the arbitrage is still not good for shipment to China so I am not sure why the queue is building,” a trader added.
“The Chinese market has not been very active after the long holiday; they are still waking up,” a trader in north Asia said.
“Importing to China is not profitable at the moment; offers of $130-150 to Shanghai were heard,” another Singapore trader said, adding that offers on the higher end were not tradeable.
Metal Bulletin assessed Shanghai nickel premiums at $125-150 per tonne as of October 15.
Three-month London Metal Exchange nickel prices have risen this month to trade above $10,300 per tonne. While this figure is $1,000 more than this year’s low, it is nearly half the level at the same time last year.
Analysts have said that about 60% of global capacity is loss making at the moment.
Following the zinc production cuts announced earlier this month, there is some anticipation that curtailments could also be announced for nickel.
So far, low nickel prices have resulted only in cutbacks announced by producers in Australia.
Deepali Sharma deepali.sharma@metalbulletinasia.com Twitter: @deepali_MB