Nickel stocks in the Shanghai-bonded zone surged in February due to the enlarged negative arbitrage between London Metal Exchange prices and the Chinese domestic market, while higher zinc stocks were attributed to sufficient domestic supply and soft demand in the China market.
In February 2018, Shanghai-bonded nickel stocks increased by 69.8% month on month, after the sustained negative arbitrage and the newly increased import tax on refined nickel attracted refined nickel imports into bonded warehouses. Meanwhile, low buying interest from Chinese stainless steel mills and traders meant the consumption of bonded stocks slowed in the month. Chinese imports of refined nickel totaled 68,006 tonnes in December 2017-January 2018, according to Chinese customs data. December imports increased 116% year on year, while imports in January were 104% higher annually. "Part of the two months' imports are very likely to move into bonded [warehouses], as the arbitrage window between LME and Wuxi most-traded contract are in big negative," a Shanghai-based nickel trader said. Importers have faced average arbitrage losses of around $350 per tonne between the LME and the most-traded Wuxi nickel contract price since China increased the import tax for refined nickel to...