Nickel exports from Japan may climb to a record this year as Prime Minister Shinzo Abe’s stimulus hasn’t spurred demand in the third-biggest user, adding to a global glut, the country’s top producer said.
Exports will rise 10 percent from a year earlier to 96,000 metric tons, Toru Higo, general manager of nickel sales and raw materials at Sumitomo Metal Mining Co., said in an interview. The global surplus may expand to 70,000 tons, the biggest in five years, he said. Morgan Stanley forecast a surplus of 38,100 tons, Macquarie Group Ltd. sees 82,000 tons and the International Nickel Study Group predicts 90,000 tons.
The metal, used for corrosion resistance in stainless steel, tumbled into a bear market on May 1 and has lost 13 percent in the past year, making it the worst performer among six-base metals on the London Metal Exchange. Abe’s policy of ending deflation through unprecedented monetary stimulus, dubbed as Abenomics, weakened the yen to a 4 1/2-year low against the dollar and improved earnings of Japanese exporters including Toyota Motor Corp. and Canon Inc.
“Domestic demand from the stainless steel industry remains subdued and the benefits from the yen’s weakness and higher stock market have yet to be felt,” Higo said on May 24.
Japan’s nickel production will climb 5.8 percent to 183,000 tons in 2013, while demand may drop 2.8 percent to 139,000 tons, Higo said. The company expanded capacity by 59 percent at its Niihama refinery earlier this year to 65,000 tons, he said, adding that the plan had been in the pipeline for year.
Nickel for three-month delivery closed at $14,805 a ton on the LME on May 24. Stockpiles monitored by the exchange reached a record 180,024 tons, data from the bourse showed May 23.
China and the U.S. are the biggest consumers, International Nickel Study Group data shows. China’s production of nickel pig iron, a substitute for low-grade ore, will increase to 350,000 tons this year, Higo said.
A pick-up in nickel pig iron usage by Chinese stainless steelmakers will curb their appetite for nickel, reducing metal prices, Higo said. Demand from China will increase by 8.5 percent to 830,000 tons in 2013, while output including pig iron will grow 10 percent to 540,000 tons, he said. China accounts for 47 percent of global demand, he said.
World stainless-steel output may rise 1.7 percent to 36.5 million tons in 2013 from its January estimate, Higo said. Output by China will rise 3.7 percent to 16.8 million tons, he said. Asia accounts for 70 percent of global stainless steel production, according to the International Stainless Steel Forum.