Indonesian Metal Mining: Polishing required

The World Bank’s metals price index for March 2015 was 43% below the February 2011 high as all metals tipped into a surplus over this 4-year period in line with weak imports from China, which accounts for half of the global metal consumption.

In addition, the World Bank recently lowered its 2015 global economic growth forecast from 3.0% to 2.8% (exhibit 1), and for emerging economies from 4.8% to 4.4%. Developing countries are not only faced by depreciating local currencies but also experience weak oil and commodity prices leading to reduced production activities.  

On China, its nickel smelters still utilize 46% of the world’s refined nickel, although consumption was down 8% y-y to 250k mt in 4M15 following 17% y-y drop in Chinese stainless steel production, which draws on 69% of the country’s refined nickel. Note that while China’s 4M15 refined nickel imports plunged 44% y-y to 42k mt, May’s imports had surged 127% y-y to 23,146mt, raising stainless steel output 5% y-y.

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