Quarterly Report – July 2019

Less than one and a half years after Tsingshan announced its intention to invest around US$ 2 billion in a three-phase cold rolling, hot rolling and smelting plant in Gujurat, the first of these has now been completed. A 600,000-tonne annual capacity stainless steel cold rolling line measuring 792 metres in length is currently in its test phase.

The next stage of this project will involve the construction of a 3 million-tonne-capacity stainless steel hot rolling mill as well as a smelting plant, while the final phase will entail the setting-up of a cold rolling mill with 1.4 million tonnes of annual capacity. The whole project is expected to be completed within the next four or five years.

In another bold move, Tsingshan has recently announced its intention to make a further investment of around US$ 3 billion in Gujurat covering the construction of facilities to produce electric vehicle batteries and metro/rail facilities.

Meanwhile, Jindal - currently India’s largest stainless steel flat producer - has filed a joint complaint with the Indian Stainless Steel Development Association (ISSDA) regarding the dumping of stainless steel flat products in the Indian market. In response, the Indian Ministry of Commerce and Industry announced on July 3 that it would launch an anti-dumping investigation into stainless steel flat products imported from 15 countries.

Although LME nickel prices have surged in recent weeks from around US$ 12,000 per tonne to nearer US$ 15,000, stainless steel scrap prices have not increased in line with these gains. In a bid to keep scrap prices lower, Indian mills have pointed to sluggish sales owing to cheaper Chinese and Indonesian stainless steel products and to the highly speculative nature of the LME.

Indeed, there is little fundamental reason to support this recent LME nickel price surge, except speculation based on expectations of lower US Federal Reserve interest rates and the possible ban of nickel laterite ore used to produce nickel pig iron, which the Indonesian government recently proposed for 2023 - a date way into the future. The last time LME nickel prices surged so quickly was on expectations that Norilsk would come under the same sanctions as Rusal or when a nickel shortage was projected owing to production of electric vehicle batteries. Once such expectations are not realised or come to be seen as too fantastic or irrelevant for the near future, markets dropped very quickly. So let’s wait and see what happens on this occasion.

Andre Reinders - Andre Reinders (India)

Andre Reinders

Nicrinox Fze (ARE)

Quarterly Report – July 2019