||China Turns to India, Australia to Fill Gap for Bauxite
China's imports of nickel ore from the Philippines and bauxite from India and Australia increased in May as buyers in the biggest consumer of commodities sought to fill the gap caused by Indonesia's ban on shipments.
Nickel ore deliveries from the Philippines surged to 3.98 million metric tons last month, the highest level since September 2012, while bauxite from India surged to a 10-month high of 547,475 tons, customs data showed. Bauxite shipments from Australia rose 21 percent from April to 1.24 million tons.
Indonesia accounted for more than 10 percent of global bauxite supplies before imposing its ban earlier this year to foster a local refining industry, analysts at Goldman Sachs Group Inc. estimate. The Southeast Asia nation was also the biggest source of ore used by China to produce nickel pig iron, a lower grade alternative to refined metal used to make stainless steel.
"More Chinese smelters are replacing Indonesian ores with material from the Philippines," said Chen Ruikan, an analyst at SMM Information & Technology Co. in Shanghai. Indian bauxite is also emerging as a substitute for Indonesian shipments and Australia is also increasing cargoes, according to Ye Yonggang, an analyst with Jinrui Futures Co. in Shenzhen.
China's laterite nickel ore imports from Indonesia, fell 87 percent last month to 38,885 tons, while bauxite shipments in May were 44,968 tons, down 91 percent from April according to customs data.
Nickel futures have climbed 34 percent this year, making them the best performer on the London Metal Exchange. They traded at $18,618 a ton at 5:12 p.m. Shanghai time. Aluminum, which is made from bauxite, has advanced 5.4 percent in 2014.
Indonesia is poised to maintain export restrictions on raw ores as Joko Widodo and Prabowo Subianto, both candidates in the nation's July election, support the policy.
Imports of refined copper fell 17 percent in May to 282,969 tons, customs data showed, marking the first on-month drop since February. Exports rose 31 percent to 28,149 tons, the highest since April 2013.
Imports slumped because of prices of refined copper in China were higher than global prices during the month, Jinrui's Ye said.
Inbound shipments could fall further in the coming months as an investigation into possible fraud involving metals stockpiled at Qingdao Port may curb purchases from abroad by traders who use commodities as collateral to get loans, Ye said.
Efforts to improve warehousing management amid the Qingdao probe will slow deliveries of imported metals in the short term, Lian Zheng, head of base metals research at Xinhu Futures in Shanghai, said last week.
Some copper may be moved from China to LME warehouses in South Korea, and possibly Singapore and Malaysia, according to Jeremy Goldwyn, head of business development in Asia at Sucden Financial Ltd.