China's refined nickel imports in May grew rapidly from the previous month as Russian producers started to trade on Shanghai Futures Exchange (SHFE) in their 2023 futures in yuan.
In January-April this year, Russian nickel shipments to China amounted to just 4,961 metric tons from 11,328 tons in the same period a year earlier. In May however exports surged to 7,026 tons, customs data showed.
Russia is the world's biggest producer of refined nickel while China is the biggest consumer of the metal which is used in stainless steel production and in renewable energy sector. According to Reuters, Chinese buyers entered negotiations with Russian nickel producers in a bid to escape the higher pricing of deals using London Metal Exchange (LME) contracts as a benchmark and turn to SHFE futures market instead.
As a result of buyers reaching agreement on 2023 supply contracts, nickel trade between Russia and China skyrocketed. Two of the sources cited by Reuters said Russia's Nornickel, the world's biggest producer of refined nickel, is now selling some nickel priced against SHFE contracts to Chinese buyers in yuan. Nornickel declined to comment, citing the "commercially sensitive" nature of the subject.
Nickel stocks in SHFE warehouses sank to a historic low of 560 tons on May 26. Stocks then rebounded to 4,221 tons by last Friday, thanks to the higher shipments from Russia.
Theodor Lisovoy for Rough&Polished
