Philippine Nickel Ore Shipments to China Plunge 96% in July

By Luzi Ann Javier

Aug. 19 (Bloomberg) -- Philippine nickel ore exports to China, the world's biggest consumer of the metal, plunged 96 percent in July as lower prices of refined nickel and energy shortages cut production of nickel pig iron.

Exports to China from the southern Philippines, which accounted for 88 percent of the Southeast Asian nation's output in 2007, fell to 38,723 metric tons in July, from 930,962 tons a year earlier, according to Bureau of Customs data obtained today by Bloomberg News. Shipments fell 80 percent to 167,389 tons in June from a year ago.

Nickel prices have dropped 30 percent in the past year on overproduction, damping demand for low-grade nickel ore from the Philippines, which can be processed into nickel pig iron. Nickel for immediate delivery fell 3.6 percent, to $18,007 a metric ton on the London Metal Exchange yesterday.

China's nickel pig iron output growth has stalled as the government shut small blast furnaces to save energy amid the sixth year of power shortages.

More than half of the blast furnace operators in China's Shandong, Henan, Shaanxi and Hebei have closed plants that produce low-grade products, lifting nickel ore stocks at Chinese ports to almost 8 million tons, compared with about 5 million tons at the end of 2007, Macquarie analysts said in June.

Many Philippine ore producers have stopped shipping nickel ore to China, Toledo Mining Corp., which runs a nickel mine in the Philippines, said on Aug. 4.

Philippine shipments of higher-grade nickel ore to Japan nearly tripled to 150,281.5 tons in July, from 50,142 tons a year earlier, according to the Bureau of Customs. A Philippine mining company shipped 46,800 tons to Australia in July, according to the government report. There were no shipments to Australia in the same month last year.

To contact the reporter on this story: Luzi Ann Javier in Manila at ljavier@bloomberg.net