Chinese Nickel Imports Jump to 6-Year High as Shortage Looms

Chinese Nickel Imports Jump to 6-Year High as Shortage Looms

China imported the most refined nickel in six years in a further sign that the world’s biggest consumer is drawing on global supply. Futures rose 2.4 percent in London.

Inbound shipments of the metal used to produce stainless steel surged 67 percent to 38,545 tons in June from the previous month, the highest since July 2009, and were more than three times the level a year earlier, Chinese customs data show.

Goldman Sachs Group Inc. and Citigroup Inc. are bullish on prices amid prospects for rising Chinese demand. Macquarie Group Ltd. sees a global shortage which may cut inventories further from a record. Stockpiles in London Metal Exchange sheds have already fallen to the lowest in almost two months. Some imports may have been for delivery against the first nickel contract to expire on the Shanghai bourse, said Celia Wang from Tianjin Zhongwei Group’s investment department.


“Huge imports arrived in China from LME warehouses as traders seek profits by delivering against the first settlement of a Shanghai nickel futures contract,” said Wang, the general manager. “Refined nickel imports are expected to remain at a high level into July.”

The Shanghai Futures Exchange started nickel trading in March and the July contract was the first expiry. The bourse is accepting metal from Moscow-based OAO GMK Norilsk Nickel, the top supplier, for settlement to ease concern about shortages.
Goldman, Citigroup

Prices climbed 2.4 percent to $11,980 a ton in London on Tuesday, the highest level since July 6, before trading at $11,875. Goldman expects rates to increase to $14,000 as the market heads toward a deficit next year, analysts including Yubin Fu wrote in a report dated July 6. Citigroup predicts a 2015 average price of $13,960 and maintains a bullish outlook.

Imports of ferronickel rose more than threefold on year to 62,511 tons, another sign China is seeking foreign supply.

An Indonesian ban on exports of nickel ore at the start of 2014 spurred China to stockpile the material and boost supplies from the Philippines, the only other major source. Inventories of nickel ore in China are now at their lowest since September 2011, according to data from Beijing Custeel E-Commerce Co.

China imported more than 100,000 tons of refined nickel in the first half for the first time since 2009 when buyers took advantage of a slump in demand after the financial crisis.

Grigor Says Talga and MRL are ‘Catalysts for Disruption in the Graphene Sector’

He says MRL is a new player in the graphene space with the ability to use the same single step, low cost graphene recovery technology

First he singled out Talga, now Warwick Grigor says he has found the other key player in the low cost graphene space.

The Sydney-based resources analyst who runs Far East Capital made headlines in Australian newspapers earlier this year when he proclaimed that he was putting his money where his mouth was and investing a large chunk of his own cash into Talga Resources (ASX:TLG) because of its single-step graphene process.

Now he has picked out another Australian company, MRL Corporation (ASX:MRF) and – again – invested his own money. He says there is room for both in an investor’s portfolio as they are operating in different fields. Talga is looking at a European hub (it is building a pilot plant in Germany and plans to supply European companies from its Swedish project) while MRL (whose deposit is in Sri Lanka) is looking to Asia and Australia as its markets.

As I have said before, Grigor is one of the most experienced Australian analysts of mining companies and, also this year, issued a detailed paper on graphene.

He says MRL is a new player in the graphene space with the ability to use the same single step, low cost graphene recovery technology that Talga “has been holding close to its chest”. His client note is advising taking up shares in MRL because of the differences in valuation: Talga’s market capitalization is A$54 million while that of MRL is A$12.2 million.

There are other differences: Talga’s orebody is much larger and wider, offering long life and technically simple mining conditions. MRL’s orebodies are narrow vein and underground with less amenability to drilling out to prove the size of the resource, but this is offset by the lower costs of working in Sri Lanka.

Another difference is the grade, says Grigor. Talga’s is around 25% whereas MRL’s is over 90%. According to his figure, Talga will need about A$30 million to get into production, MRL less than A$10 million.

He says at this junction Talga is knocking on the door of becoming an institutional-grade stock but has to kick a few more goals to get there, the obvious one being the successful commissioning of the pilot plant. “I don’t think there is much risk here, but the box still needs to be ticked,” write Grigor. By contrast, at A$10 million, MRL is still a private client stock at present; it is difficult to deploy sizeable sums of money into a company with such small capitalization.

Grigor’s second point, arguing that Talga needs to beef up its management team with respect to commercial operations, seems to have been satisfied. Last week Talga signed a non-binding term sheet with Haydale Graphite Industries, based in Britain, which would see the two companies collaborate on the development of finished graphene composite and ink products. [As Roger Bade, at London brokers Whitman Howard noted, “although there is no certainty that this collaboration will come to anything, it could give credibility that both companies – although going along separate routes – are amongst the best graphene plays out there”.]

Grigor draws comfort from the fact that his two picks are essentially non-competitive because of their separate regional focus.

“As each of these companies make progress, sentiment will rub off on other players in the sector as the graphene story becomes more credible,” he says. “Both companies will offer the lowest cost, purest forms of graphene available, so they will both be catalysts for disruption in the graphene sector.”

Pacfico Minerals Surges on Copper Hits

Core from Coppermine Creek

Three holes drilled at the Coppermine Creek prospect intersected significant intervals of disseminated chalcopyrite and bands of semi-massive chalcopyrite.

One of the holes returned veins and disseminated chalcopyrite from 38-67m, with the interval from 67-73m corresponding to the Gordons Fault and containing bands of semi-massive chalcopyrite, as well as chalcopyrite fracture fill and disseminations.

The company said the chalcopyrite was associated with only minor pyrite and returned values of more than 25% using a hand-held XRF over widths of up to 30cm.

Assays are expected within a fortnight.

Airborne electromagnetics indicate a 3km by 1km alteration and mineralisation system extending away from the Gordons Fault to the southwest, with further drilling planned to test it.

Pacifico has also started drilling the Bing Bong prospect with the assistance of a NT government grant.

Borroloola West was one of the projects Sandfire floated on in 2004 but the company farmed it out to Pacifico in 2013.

Pacifico expects to earn 51% of the project by the end of the year by spending $A1.5 million under the first phase of the agreement.

The company can earn an additional 19% by spending a further $2.5 million and can get to 80% by sole-funding a bankable feasibility study or spending another $3 million.

Shares in Pacifico jumped 130% to 3.2c, while Sandfire shares gained 1.4% to $5.71