Stainless MMI Up, Filipino Nickel Ore Production Down

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Our Stainless MMI rose 3.3% in November as nickel prices continue to look strong.

Stainless_Chart_December-2016_FNL

The Philippines’ output of nickel ore fell 16% in the third quarter from a year earlier, as a result of several mine suspensions due to environmental violations. The country has already stopped work at 10 of its 41 mines, eight of which are nickel mines. 20 More mines, 14 of which mine nickel, could see their licenses suspended.

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Environment and Natural Resources Secretary Regina Lopez recently said that there will definitely be more mine suspensions when the country releases rulings on those 20 mines, possibly within the next few days.

Meanwhile, Indonesia will cut the royalty charged on sales of processed and refined nickel to 2%, from the current 4%, to encourage more miners to develop smelters. In addition, the country appears unlikely to resume nickel ore and bauxite exports.

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On the other side of the equation, higher than expected Chinese demand is adding fuel to nickel’s price rally. The Caixin Manufacturing PMI in China was 50.9 in November, the fifth straight month of expansion. In addition, the U.S. is set to increase infrastructure spending as Donald Trump takes office.

Apart from the bullish narrative of more demand and less supply, prices are acting strong as it appears that bulls are still in control. Over the past few weeks, nickel prices are resting near $11,500/mt in what it looks like a pause to be followed by another price rally. Specially, considering the ongoing bullish sentiment across the entire industrial metals complex.

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