Russian President Vladimir Putin said on Wednesday (September 11, 2024) that Russia may consider restricting exports of nickel, titanium and uranium, but is not in a hurry to discuss commodity export restrictions.
Though China has long been a major destination for Russia's nickel exports, the potential export control is unlikely to significantly impact China's domestic nickel supply with the continuous commissioning electrowinning nickel capacity.
Source: GACC
In terms of Russia's domestic nickel consumption, only 10-15% of nickel products produced in Russia were consumed domestically, and the remaining 85% or more were exported. However, with rising consumption in the military industry, Russia's domestic nickel consumption has increased significantly in recent years.
China, being the largest nickel consumer around the world, has been reducing the independence on Russia's nickel exports primarily due to sagging refined nickel consumption in the stainless steel sector and rapidly expanding electrowinning nickel capacity in China, which has gradually led the industry towards oversupply.
In this case, Russia's refined nickel exports to China totaled merely 38,000 tonnes in 2023, a drop of 16.23% year on year. In 2024, the exports to China were down further at 16,200 tonnes over January-July, and the annual exports to China are unlikely to exceed 30,000 tonnes since there are two more nickel projects expected to come on stream in the fourth quarter in China, in addition to the ramp-up of operating projects.
Russia, rich in nickel resources, have two major nickel mines, namely Taimyr Peninsula and Kola Peninsula. Taimyr Peninsula is one of the largest nickel mines in the world, in which Norilsk Nickel holds shares. The ore resource reserves amount to 2,197,740,000 tonnes, of which 16,853,000 tonnes are nickel.
Kola Peninsula is located in the Murmansk Oblast of Russia. It is one of the top ten nickel mines in the world, and its shareholder is also Norilsk Nickel. The ore resource reserves stand at 831,884,000 tonnes, of which 4,544,000 tonnes are nickel.
Headquartered in Russia, Norilsk Nickel is the world's largest producer of refined nickel. Its main nickel production bases include its Russian headquarters and Finnish branch, with a total capacity of 300,000 tonnes/year at full capacity. In 2023, Norilsk Nickel's Russian and Finnish bases produced a total of 212,000 tonnes refined nickel, accounting for 25% of global production.
However, due to the sanctions imposed by Europe and the United States, Norilsk Nickel had to reduce the production to ease the sales pressure. In 2023, Norilsk Nickel's refined nickel production was about 209,000 tonnes, down 1.4% compared with the previous year. Affected by the low nickel price in 2023, Norilsk Nickel once again lowered its production guide, and its production is expected to drop about 10% year-on-year in 2024, and some nickel resources will flow into China in the form of intermediate products.
Sources: SHFE, LME
On April 12, 2024, the U.S. Treasury Department and the United Kingdom issued two new bans, prohibiting the import of aluminium, copper, and nickel from Russia, and restricting the use of aluminium, copper, and nickel produced in Russia on or after April 13 in transactions on global metal exchanges LME and CME. Influenced by this news, LME nickel once surged above $19,000/t on April 15.
Written by Aggie Hu, huchenying@mysteel.com