May 28, 2016
Philippines' Major Nickel Miner Seals China Supply Deals

Global Ferronickel Holdings Inc, the Philippines' second-biggest nickel ore miner, signed contracts with Chinese buyers, including Baosteel, equivalent to about 90 percent of its nickel ore output target for this year, it said on Monday.

The supply deals as well as efforts to cut operating costs amid the slump in nickel prices since last year should help the company stay profitable this year, it said. Nickel prices have fallen due to rising stockpiles and weak Chinese demand.

Philippine nickel ore producers, the biggest suppliers to top market China of the metal used in making stainless steel, agreed earlier this month to slash output and exports in 2016 by as much as 20 percent in response to weak prices.

The company will deliver a total of 4.5 million wet metric tonnes (wmt) to three Chinese customers for a period of one year at spot prices, including 1 million wmt to Baoshan Iron & Steel, also known as Baosteel, it said in a statement.

Stainless steel producer Tsingshan Holding Group has committed to buy 2.5 million wmt, while Shanghai International Trade will buy 1 million wmt, it said.

Global Ferronickel plans to cut shipments to about 5 million wmt this year from 5.4 million in 2015, but has the flexibility to increase the volume if prices rise, company officials told Reuters in a March 18 interview.

"We are very excited with our prospects for 2016," Global Ferronickel President Dante Bravo said after announcing the deals with three of China's biggest stainless steel makers.

"We have managed to reduce contracted operating costs by as much as 30 percent to remain very competitive."

Global Ferronickel has yet to release its 2015 financial and operating results. Nine-month net income was 949 million pesos ($20.4 million) versus 4.8 billion pesos in 2014.

Nickel prices have rebounded from a 13-year low of $7,550 a ton in February, with London Metal Exchange nickel trading at $8,651 on Monday, possibly due to output cuts, analysts say.

(Reporting by Enrico dela Cruz; Editing by Richard Pullin and Christian Schmollinger)

Source:Reuters