Nickel & Stainless Steel Data Monthly

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Information about Nickel & Stainless Steel Data Monthly

Published on June 17, 2016

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1. y No. 38 Published Monthly by: Beijing Antaike Information Development Co., Ltd. Chief Editor: Hannah Zhou (Ms.) Research Team: Xu Aidong (Ms) Fan Runze (Mr.) Li Yanyan (Ms.) Liu Yujing (Ms.) Sales Manager: Xiaofei Yang Tel: +86-10-63965283 Fax: +86-10-63971647 Web site: http://www.antaike.com Email:xiatian@antaike.com Address: 2 nd Floor, 12B Fuxing Road, Haidian District, Beijing 100814, P. R. China Disclaimer: Whilst every effort has been made to prepare this report, Beijing Antaike Information Development Co., Ltd. makes no warranty of any kind in regard to the contents and does not accept responsibility for any losses or damages arising directly, or indirectly, from the use of this report. All Rights Reserved The contents of this report are for the sole use of the client and its employees and may not be transmitted in any form whatsoever to third parties. ©2016 Beijing Antaike Information Development Co., Ltd. The Most Essential and Authoritative Source for Chinese Metals Market INSIDE THIS ISSUE China Nickel Apparent Consumption........................................................ 1 China Primary Nickel Supply-Demand Balance Unit: tonne .......... 1 Price Trend Analysis................................................................................... 2 China Primary Nickel Supply..................................................................... 6 China Primary Nickel Consumption.......................................................... 8 China Primary Nickel Inventory................................................................. 9 Important Ni Product Import and Export ................................................ 10 Production Cost......................................................................................... 13 China Newly-built NPI projects................................................................ 14 Conclusion................................................................................................. 15 Outlook....................................................................................................... 17 News........................................................................................................... 18 Statistics..................................................................................................... 23 Jun. 2016 No. 61

2. Nickel & Stainless Steel Monthly, June No.61 1 http://www.antaike.com cmm@antaike.com China Nickel Apparent Consumption China Primary Nickel Supply-Demand Balance Unit: tonne 2014 2015 Jan.2016 Feb. 2016 Mar. 2016 Apr. 2016 Output of Ni Cathode & Utility 218,392 206,731 15,150 14,550 17,600 16,300 Output of Ni Salts 20,000 18,891 2,500 2,300 2,700 2,900 Output of NPI 471,500 385,035 24,950 22,500 27,956 32,659 Output of Primary Nickel 709,892 610,657 42,600 39,400 48,256 51,859 Import 221,000 437,164 46,032 40,631 54,961 64,643 Apparent Supply 930,892 1,047,821 88,632 80,031 103,217 116,502 Export 107,000 22,732 558 198 731 310 Apparent consumption 9,193,892 1,025,089 88,074 79,833 102,486 116,192 Source: Antaike Note: The Ni output figure is revised by Antaike based on CNIA figure Imports include refined nickel (99.95%-99.99%), other refined nickel, nickel powders and flakes and FeNi According to Antaike Statistics, the primary nickel production was 52,000t in April, while import of nickel products was 64,000t (Ni content), output was 310t. We expect that the apparent nickel consumption eas 116,000t in April, up by 14% m/m, and totaled at 386,000t in January-April, up by 37% y/y.

3. Nickel & Stainless Steel Monthly, June No.61 http://www.antaike.com cmm@antaike.com 2 Price Trend Analysis Source: Antaike About the low grade Ni and high grade Fe nickel ore, Ni:0.6-0.8% nickel ore price maintained sable in May. Ni:0.9-1.1% ore price rose by 15 yuan/wmt with small transaction volumes at ports due to low level stocks. A Shandong plant purchased Ni:0.9%, Fe:49% ore at 160 yuan/wmt. Some Ni:0.85%, Fe49% ore was said be traded at 155 yuan/wmt. Middle and high grade nickel ore remained stable in May. The decrease of LME 3-month nickel price and domestic NPI price slide have seen the decrease in nickel ore price in Philippine market, but quotations for spot goods at port remained few. Shandong port had 10,000t of Ni:1.85% ore being traded at 320 yuan/wmt, slightly lower than market price. A northern port had Ni:1.56% ore available for sale at price of 270 yuan/wmt. 0 200 400 600 800 1,000 1,200 RMB/t China Nickel Ore Price Trend 1.8%-1.9% 2.0%-2.1% 0.9-1.0%

4. Nickel & Stainless Steel Monthly, June No.61 http://www.antaike.com cmm@antaike.com 3 Source: Antaike In Philippine market, Ni:0.6-0.85 ore maintained stable with small trading volume. Ni: 0.9-1.1% ore price decreased by USD1/wmt. Most of Ni:0.9%, Fe:49% ore were traded at USD120 FOB/wmt, some were traded at USD10 FOB/wmt. The Ni:0.9%, Fe:49% ore at Lianyungang Port and China’s northern ports were traded at USD18 CIF/wmt. Middle grade nickel ore price decreased USD1/wmt in May. Ferronickel plants substantially lowered buying price of nickel ore for cost reason following the decrease in the bidding price for high grade NPI. Ni:1.5% ore price were concluded at USD31-32 CIF/wmt earlier in May and some were traded at USD28 CIF/wmt at end of May. High grade nickel ore price decreased USD2/wmt in May. The guiding price for Ni:1.8% ore was not available as Philippines mines suspended quotations. 0 50 100 150 USD/wmt FOB Trend of Philippine Nickel Ore 1.80% Ni0.6 Fe50 Ni0.9 Fe49

5. Nickel & Stainless Steel Monthly, June No.61 http://www.antaike.com cmm@antaike.com 4 Source: Antaike In May, the average ex-factory price of high grade NPI was 753 yuan/nickel unit, up by 38 yuan/nickel unit m/m. The average ex-factory price of middle grade NPI was 789 yuan/nickel unit, up by 54 yuan/nickel unit. And low grade NPI price was 2,140 yuan/t, up by 203 yuan/t m/m. TISCO’s bidding price for high grade NPI was 735 yuan/nickel unit in June, down by 15 yuan/nickel unit m/m, price was higher if quantity was large. POSCO’s last round of bidding price was 730-740 yuan/nickel unit, Delong’s bidding price was determined according to every single order. Tsingshan suspended bidding for two months as Indonesian project shipped back sufficient ferronickel and is less likely to bid in the future. Source: Antaike The average spot price of refined nickel was 68,592 yuan/t, down by 1.4% m/m. JNMC decreased its ex-factory price of nickel cathodes by 4,500 yuan/t to 66,500 yuan/t by the end of May. Premium for spot nickel price slightly rose to 200-300 yuan/t in end May as LME 3-month nickel price fell. 50,000 70,000 90,000 110,000 130,000 150,000 170,000 500 700 900 1,100 1,300 1,500 1,700 RMB/t RMB/Ni unit China NPI Price Trend 4-6% NPI (L ) 10-15% NPI (L ) Changjiang Cash Ni Price (R ) -15,000 -10,000 -5,000 0 5,000 10,000 15,000 20,000 60,000 80,000 100,000 120,000 140,000 160,000 RMB/t Refined Nickel Price Gap between LME and SH Changjiang Gap (LME-SHFE) LME-R SH Changjiang-R

6. Nickel & Stainless Steel Monthly, June No.61 http://www.antaike.com cmm@antaike.com 5 Source: Antaike Stainless steel price fell unilaterally in May. It dropped from 13,200 yuan/t in early May to 11,800 yuan/t at the end of May, with average price of 12,489 yuan/t, up by 4.1% month on month. Nickel price declined from $9,400/t to below $8,400/t during the same period. The price of 304HR represented the same trend with CR, with average price of 11,750 yuan/t, up by 3.7% month on month. Source: Antaike Domestic high carbon ferrochrome price increased greatly in May affected by the tight market supply. Monthly average factory price in Inner Mongolia was 5,747 yuan/base t, up by 12.9% month on month. 0 5,000 10,000 15,000 20,000 25,000 RMB/t China CR Stainless Steel Price Trend 430/2B L1/2B 304/2B 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 RMB/t China Ferrochrome Price Trend Ferrochrome price

7. Nickel & Stainless Steel Monthly, June No.61 http://www.antaike.com cmm@antaike.com 6 Source: Antaike Both chrome ore and ferrochrome prices increased significantly. Average price of South Africa 40-42% chrome concentrate stood at $156/t in May, up by 47% compared with the $106/t in April. Turkey 42% lump ore averaged at $190/t, up by 21% compared with the $157/t in April. Domestic chrome ore price followed the rising overseas price in May. Average price of South Africa 42% powder ore stood at 28 yuan/mtu in May, up by 6 yuan/mtu compared with April. Turkey 42% lump ore averaged at 42 yuan/mtu, up by 7 yuan/mtu compared with April. China Primary Nickel Supply Source: Antaike According to Antaike Statistics, China’s NPI production was 32,700t (Ni content) in April, up by 17% m/m but down by 8% y/y, returning back to 30,000t level after half year. In particular, the high grade NPI production reached 24,300t, up by 20% m/m but down by 16% y/y, of which RKEF process was 21,800t, accounting for 89% of total production, electric furnace process was 2,500t, up by 4% m/m. The middle grade NPI production continued decreasing to 300t. The low grade NPI production was 8,100t, up by 12% m/m. 0 10 20 30 40 50 60 China Chrome Ore Price Trend South Africa 42% powder ore Turkey 42% lump ore RMB/mtu 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 tonne China Nickel Monthly Output NPI Ni cathode & utility Ni salt

8. Nickel & Stainless Steel Monthly, June No.61 http://www.antaike.com cmm@antaike.com 7 Source: Antaike Most of high grade NPI enterprises maintained stable production, showing that some large enterprises’ production sharply increase in March, and there were three to four producers restarted operation in April with faster output growth. The operation rate of low grade NPI increased slightly in April on a month-on-month basis in Shandong area where China’s major low grade NPI production clustered. Besides, some low grade NPI producers started to produce higher grade products at Ni:2.5-2.7% . Stainless steel integrated enterprises’ NPI production (including high and low grade NPI) stood at 18,000t in April, accounting for 55% of NPI production in China, therefore, only 14,700t were left for sale on spot market, increasing 2,700t than that in March. In May, the operation rate for high grade NPI increased by 2% from April to 42%, for middle grade NPI remained at 3%, and low grade NPI increased by 3% m/m to 48%. The prices of middle and grade NPI fell after a mini rally during May following the destocking of middle and grade NPI when nickel traders showed strong wills to reduce inventory. 0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 10kt China NPI Monthly Ouput High grade NPI Middle grade NPI Low grade NPI

9. Nickel & Stainless Steel Monthly, June No.61 http://www.antaike.com cmm@antaike.com 8 China Primary Nickel Consumption Source: Antaike Notes: 2016 data is forecast data China’s stainless steel output was 2.06Mt in April, up by 8.9% year on year and 1.4% month on month. Of which output of 300 series was 1.08Mt, up by 9.3% year on year and 0.1% month on month; 400 series 370kt, up by 11.3% year on year and 1.8% month on month; 200 series 610kt, up by 6.9% year on year and 3.5% month on month. Price rise of raw material was weaker than stainless steel products in April, so stainless steel plants had excellent profit. Traders want to order more from steel mills in hope to accelerate inventory turnover and gain more profit; downstream users were also willing to increase inventory when price increased, which combined to push up stainless steel output in April. The ramp up of high quality capacity will be accompanied by the elimination of outdated capacity in 2016 due to the steadily recovered demand. It is estimated stainless steel output will remain high in May. Note: there are some corrections of stainless steel output in March: total output was 2.03Mt, of which 300 series 1.075Mt, 200 series 595kt and 400 series 362kt. 0% 20% 40% 60% 80% 100% China Stainless Steel Ratio Output by Various Series 200 series 300 series 400 series 401 series

10. Nickel & Stainless Steel Monthly, June No.61 http://www.antaike.com cmm@antaike.com 9 China Primary Nickel Inventory Source: Antaike By the end of May, the total nickel ore stocks at 12 Chinese ports reached 12,850,000t, increasing 150,000t from end of April, including 10,900,000t of Philippine ore, and 1,950,000t of Indonesian ore. Medium and large scale enterprises mainly bought Philippines nickel ore futures. Philippines futures price decreased following the slide in domestic middle and high grade NPI prices. Chrome ore port inventory reached 1.33Mt in late May, down by 150kt compared with the 1.62Mt in late April, of which Lianyungang was 330kt, down by 170kt year on year; Tianjin port 630kt, up by 50kt, Zhanjiang port 120kt, down by 70kt. The low chrome ore inventory was bad to ferrochrome plants in arranging production. Chinese buyers became very passive when price rose. Foreign investors had the confidence to pull up chrome ore futures price sharply. 0 500 1,000 1,500 2,000 2,500 3,000 10kt China Nickel Ore Stockpile Tianjin Lianyungang Rizhao Lanshan Jingtang Yingkou Tieshan Fangchenggang Caofeidian Dafeng Dongjiakou Lanqiao 0 50 100 150 200 250 300 China Chrome Ore Stockpile Lianyungang Zhanjiang Fangcheng Shanghai Tianjin

11. Nickel & Stainless Steel Monthly, June No.61 http://www.antaike.com cmm@antaike.com 10 Important Ni Product Import and Export Source: Antaike According to China Customs Statistics, China imported 1.368mt of nickel ore, down by 55.6% y/y and down by 8.38% m/m, of which, Philippine laterite nickel ore was 1.26mt, down by 10% m/m. The nickel or import totaled 4.53mt in January-April, down by 34% y/y. Even though Philippines switched to middle grade nickel ore as major imported product from previous low grade nickel ore, most of Philippine mines reduced supply of middle grade ore as the LME 3-month nickel price lingered below USD9,000/t for a long time. The largest nickel ore importers in April included Fujian Daxing Imp.& Exp. Co., Ltd, Baosteel Desheng Stainless Steel Co., Ltd, Hualun Jingchuou Co., Ltd, Beijing Uni-Construction Logistics Co., Ltd and Guangxi Fanhai Commerce Co., Ltd in sequence. 0 1 2 3 4 5 6 7 8 9 MT China Nickel Ore Import by Countries Indonesia Philippines Others

12. Nickel & Stainless Steel Monthly, June No.61 http://www.antaike.com cmm@antaike.com 11 Source: Antaike The nickel ore ocean freight for China in May increased from April. Philippines (Surigao) ocean freight to Lianyungang port was USD5.7 and to Tianjin port was USD6.2, while the ocean freight from Zambales to Lianyungang port was USD4.7 and to Tianjin port was USD5.2. Source: Antaike Chinese nickel intermediate products import totaled 28,781 tonnages in April, 2016,up by 30.6% y-o-y. 2 4 6 8 10 12 14 16 18 USD/wmt Philippines/Indonesia Ocean Freight for China North Philippines North Indonesia 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 tonne China Nickel Intermediate Products Import

13. Nickel & Stainless Steel Monthly, June No.61 http://www.antaike.com cmm@antaike.com 12 Source: Antaike We suggest that the import of refined nickel is promising in May. According to China Customs Statistics, China imported 49,000t of unwrought nickel in April, surging 169% over the same period last year, and the amount totaled at 158,000t in during January-April, up by 271% y/y. By the end of May, nickel stocks at China’s bonded warehouses increased by 6,000t to 81,000t, and the total stocks in China increased by nearly 30,000t from April to around 240,000t. Most of imported nickel was not consumed by downstream enterprises. Source: Antaike According to China Customs Statistics, China imported 107,200t of ferronickel in April, up by 42.6% y/y and up by 59.1% m/m. Of the total import 84,000t was imported from Indonesia, including 82,000t from Tsingshan project, 8,650t from New Caledonia, 6,556t from Brazil and 5,042t from Columbia. Tsingshan project in Indonesia reached monthly production of 80,000 physical tons since Phase II put into production in April, which were totally shipped back to China for the production of Tsingshan’s enterprises. 0 10,000 20,000 30,000 40,000 50,000 60,000 tonne China Refined Nickel Import & Export Import Export 0 20,000 40,000 60,000 80,000 100,000 120,000 tonne China Ferronickel Import

14. Nickel & Stainless Steel Monthly, June No.61 http://www.antaike.com cmm@antaike.com 13 Source: Antaike According to China Customs Statistics, China imported 107,200t of ferronickel in April, up by 42.6% y/y and up by 59.1% m/m. Of the total import 84,000t was imported from Indonesia, including 82,000t from Tsingshan project, 8,650t from New Caledonia, 6,556t from Brazil and 5,042t from Columbia. Tsingshan project in Indonesia reached monthly production of 80,000 physical tons since Phase II put into production in April, which were totally shipped back to China for the production of Tsingshan’s enterprises. China exported 349,400t of stainless steel in April, rising by 4% month on month and 16.5% year on year. Of the export destination, Taiwan ranked the top with 87,600t, followed by South Korea 55,000t, Vietnam 35,000t, Italy 26.4kt, India 25.4kt, and Thailand 21kt. Production Cost Source: Antaike Based on Ni:1.5% ore at 230 yuan/t, NPI cost in Jiangsu reached USD11,600/t, equivalent to 958 yuan/nickel unit; Inner Mongolia NPI cost reached USD10,100/t, equivalent to 780 yuan/nickel unit. Shandong RKEF cost (self-generation power plant) was USD8,850/t, equivalent to 680 yuan/nickel unit. Considering raw material price and steel mill’s current bidding price at 735-740 yuan/nickel unit, most of NPI plants in China began to gain slight profit. 0 5 10 15 20 25 30 35 40 45 10kt China Stainless Steel Import & Export Import Export Net export 0 20000 40000 60000 80000 100000 120000 140000 160000 180000 RMB/t China NPI Cost by Regions Jiangsu Inner Mongolia Fujian RKEF

15. Nickel & Stainless Steel Monthly, June No.61 http://www.antaike.com cmm@antaike.com 14 China Newly-built NPI projects China’s ferronickel projects in Indonesia are expected to produce 104,000t of ferronickel in 2016, increasing 80,000t than that of 2015, thanks to the Phase II of Tsingshan project whose annual production increased by 56,000t from 2015 to 80,000t in 2016. In April Tsingshan project shipped 82,000t of ferronickel to China. Besides, a 300,000t/y ferronickel alloy project in Sulawesi invested by Jiangsu Dafeng Haebor was being constructed in two phases. Phase I was invested by USD60 million to install traditional production line with annual capacity of 135,000-150,000t/y, and Phase II was invested by 240million yuan to install independent R&D low temperature reduced new production line to reach 150,000-157,000t/y capacity.

16. Nickel & Stainless Steel Monthly, June No.61 http://www.antaike.com cmm@antaike.com 15 Conclusion The LME 3-month nickel price snapped a downside shot in May falling from a year-high of USD9,700/t to USD8,300/t losing all the 10% rise in April in response to series of bad news in macroeconomic condition, including the frequent Hawkish statement from FED, the great possibility of raising the interest rate and the increase of USDX. In fundamental conditions, the stainless steel production ramping up in May is recommended to have limit stimulus in nickel consumption as the blocked downstream circulation of stainless steel picked up market stocks, which attracted the focus of attention on supply side rather than demand side, even though nickel consumption slightly improved when steel mills lowered offer price for destocking. The LME 3-month price may cease the slump at the end of May when news released that some steel mills would idle for maintenance. The LME stocks declined 14,694t from 427,438t in end April to 402,744t at the end of May. While SHFE stocks increased by 12,604t to 96,491t during the same period. An obvious material movement from LME to SHFE stood total amount at 499,235t only 2,090t decreased. Most of the transfer was Norilsk refined nickel that occupied almost all of LME warehouses previously and now declined to 40% since it was deliverable against SHFE contract without premium and discount. Currently most of SHFE stocks are Norilsk nickel. According to statistics data from foreign institution, global nickel stocks reached about 1,000,000t including registered warehouse stocks at Exchanges and other stocks, which could afford six-month consumption. Therefore, given NPI plants’ curtailment contributed into shortage of supply and demand from stainless steel market was strong, the high nickel inventory will delay the rally of nickel market to 2017. We are expecting that nickel price will move at lower bottom in the coming seasonal slack period. Premium for imported refined nickel maintained stable, but the growing anticipation of the appreciation of U.S dollars that further exacerbated the depreciation anticipation of China Yuan substantially dragged down the medial rate of Yuan against U.S dallar by 300 point, hitting a five-year new low, which may sharpen the capital outflows or help narrow the loss of imported nickel. JNMC’s refined nickel production decreased by 1,000-1,500t m/m in April and the downward trend continued in May due to the tightness in ore supply. Xinjiang Xinxi Mining Co., Ltd had stable production at about 900t in May, similar with that in April. Xinxin conducted maintenance since end May and expected to finish in end July. By the end of May, domestic NPI stocks stood at 15,000t (Ni content), decreasing 500t from April, of which high grade NPI stocks were 13,400t, down by 100t m/m, middle grade NPI stocks were 1,400t, down by 400t m/m, and low grade NPI stocks remained

17. Nickel & Stainless Steel Monthly, June No.61 http://www.antaike.com cmm@antaike.com 16 stable at 200t. By the mid of May, stainless steel inventory on Wuxi and Foshan markets, the main two transaction markets in China, amounted to 314,000t, down by 12.8% year on year, of which 300 series was 226,600t, up by 9.6% year on year; 200 series 45,200t, rising by 19.9% year on year; 400 series 42,200t, increasing by 23.8% year on year. Proportion of the above three products was 72%, 14% and 14% respectively. Ferrochrome output was 1.13Mt during the first four months, down by 6.6% year on year; total import was 750kt, down by 17% year on year; stainless steel output was 7.35Mt during Jan.-Apr., up by 5.3% year on year, of which 300 series output was 3.77Mt, up by 9% year on year. 300 series consumed more ferrochrome compared with 200 series and 400 series. Total ferrochrome consumption was 2.19Mt. Antaike calculates ferrochrome shortage is 240kt, and inventory was 260kt during Jan.-Apr. Market was in severe unbalance in May. Although ferrochrome output increased by 15% month on month in May, the demand gap was filled by import. It is predicted market will become calm in June. China imported 164,800t of high carbon ferrochrome in April, down by 29% month on month, according to Customs. A stainless steel plant in south region just imported 6,000t, equivalent to just 1/10 of the amount in March, all from Zimbabwe. It is reported that there was port congestion in South Africa, thus materials from the country will be delayed. Import of TISCO was 24kt, all from Kazakhstan; LISCO imported 31,500t, all from South Africa; POSCO (Zhangjiagang) imported 10,000t, both from India and South Africa; Fujian Xingda’s over 40kt was from South Africa and India.

18. Nickel & Stainless Steel Monthly, June No.61 http://www.antaike.com cmm@antaike.com 17 Outlook According to statistics, the shipment from Philippines substantially increased to more than 100 ships in May. The import of nickel ore will increase on a month-on-month basis. High grade NPI output was reduced by about 50% as stainless steel mills and NPI plants temporally shut down for electricity upgrading in Yangjiang Region that will last for 20 days. But some large enterprises may increase production combining with those who resumed production; it is possible that high grade NPI production may slightly grow in June. Meanwhile, low grade NPI may continue increase as environmental protection renovation in Shandong had little impact on production in June. The high-stocked stainless steel inventory contributed by blocked downstream demand had negative impact on nickel market. Stainless steel price declined in May mainly because of the falling nickel price. The weak price in June will be benefited from the significant rising bidding price of ferrochrome. Ferrochrome price will keep high thanks to the strong chrome ore price and weaker-than-expected ferrochrome supply.

19. Nickel & Stainless Steel Monthly, June No.61 http://www.antaike.com cmm@antaike.com 18 News 8mt of ferronickel produced by Tsingshan Indonesian project in April It is informed by Indonesian Tsingshan Industrial Park, SMI and GCNS projects, the first two constructed projects in the Park hit the record high of production again at 8mt in April and delivered them all to China for self-production, which means the SMI and GCNS have reached full capacity and reached record high export. Meanwhile, the third project ITSS in the Park was constructed systematically as planned and will put into operation in end 2016 when realizes ferronickel capacity of 1.6mt (1.6mt of nickel metal). JNMC decreases nickel production in May Affected by nickel ore shortage since April, Jinchuan Group Co., Ltd decreased production by 1,500-2,000t to around 13,000t in April compared to 13,500-14,000t in March, and the decrease may continued to May. Nickel sulfide ore suspension in Australia and Brazil tightened the supply to JNMC. What’s worth JNMC’s owned No.1 mine was still in a shorter shutdown. Nickel demand increased to peak during March and April period, and May sales is expected to maintain stable or slightly fall. China levies a resource tax on nickel ore based on price since May 7 Ministry of Finance (MOF) and State Administration of Taxation (SAT) jointly issued Announcement of Comprehensively Advancing Resources Tax Reform on May 10, which will take effects on July 1, 2016. According to the announcement, China will levy resources tax on 21 species resources and other metals based on sales value instead of quantity. The 21 species resources include iron, gold, copper, bauxite, lead & zinc mine, nickel, tin, plumbago, Diatomaceous earth, kaolin, fluorite, limestone, pyrite, phosphorite, kalium Chloratum, potassium sulfate, well and rock salt, lake salt, salt by extracting subsurface brine, Coalbed Methane and sea salt. The resources tax rate on nickel ore will be at 2-6%. The announcement stated that government at all levels should determine local tax rate that is applicable to local condition as

20. Nickel & Stainless Steel Monthly, June No.61 http://www.antaike.com cmm@antaike.com 19 required with full consideration of local resource reserve, affordability of enterprises and minus of fees according to the resources tax and mineral resource compensation fees that local enterprises have paid in previous years and the mineral product prices. Data indicate that the quantity based resources tax on nickel ore that started from November 1 , 2011 were levied at 12 yuan/t for grade II covering JNMC Mine II and JNMC Longshou Mine, at 11 yuan/t for grade III and 10 yuan/t for grade IV covering Jien Nickel, and 9 yuan/t for grade V ore that involved Hualong county mine. A Liaoning high grade NPI plant plans operation in June A high grade NPI plant located in Jincheng city, Liaoning that start construction of 2 sets of 33,000kva electric furnace plans to put into operation in June. It is said that the plant was advancing smoothly and it has purchased some nickel ore for the operation. A Hebei NPI plant maintenance BF A blast furnace (BF) operating NPI plant located in Tangshan city, Hebei, overhauled its one set of 65m3 and one set of 128m3 blast furnace recently. The plant mainly conducted the operation of middle and low grade NPI. A NPI plant in Shandong reopens A NPI plant in Linyi city, Shandong plans to resume its ones set of blast furnace recently. The plant that owns one set of 158m3 blast furnace and two sets of 25,500kva RKEF electric furnace previously produced high and middle grade NPI and suspended production since Q1, 2015 due to environment protection restriction and weak market. A high grade NPI plant in Jiangsu plans to restart A high grade NPI plant in Lianyungang city, Jiangsu that owns 8 sets of 4,300kva RKEF electric furnace and idled operation since end 2015 is said to plan resuming production of high grade NPI in June.

21. Nickel & Stainless Steel Monthly, June No.61 http://www.antaike.com cmm@antaike.com 20 A low grade NPI plant in Liaoning will resume production A low grade NPI plant in Jinzhou city, Liaoning province has prepared for reopen and will resume operation in late May. The plant mainly conducted the production of low grade NPI previously owning one set of 300m3 blast furnace, and it idled the furnace before. A middle grade NPI plant expands EF operation A middle grade NPI plant located in Jinzhong city, Shanxi province previously operated one set of 12,500kva electric furnace (EF) and one set of 25,000kva EF for middle grade NPI production. Recently it is said that it reopened its idled four sets of 12,500kve EF to produce Ni:4-6% NPI. A high grade NPI plant in Jiangsu to reopen in June A high grade NPI plant in Lianyungang city, Jiangsu that owned eight sets of 43,000kva RKEF electric furnace is said to plan to reopen its operation that suspended since the end of 2015 since early June. A newly-built NPI plant in Inner Mongolia for resale A high grade NPI plant in Inner Mongolia with one set of newly-built 25,000kva electric furnace is looking for buyer. South32 increases 1.16% nickel production in Q1 South32, a subsidiary of BHP Billiton, produced 8,700t of ferronickel in the first quarter of 2016, up by 1.16% m/m. Its Cerro Matoso mine decreased ferronickel production by 7.5% y/y from 10,587t to 9,807t during the same period. A Liaoning high grade NPI plant plans operation in June A high grade NPI plant located in Jincheng city, Liaoning that start construction of 2 sets of 33,000kva electric furnace plans to put into operation in June. It is said that the plant was advancing smoothly and it has purchased some nickel ore for the operation. JNMC decreases nickel production in May Affected by nickel ore shortage since April, Jinchuan Group Co., Ltd decreased production by 1,500-2,000t to around 13,000t in April compared to 13,500-14,000t in March, and the decrease may continued to May.

22. Nickel & Stainless Steel Monthly, June No.61 http://www.antaike.com cmm@antaike.com 21 Nickel sulfide ore suspension in Australia and Brazil tightened the supply to JNMC. What’s worth JNMC’s owned No.1 mine was still in a shorter shutdown. Nickel demand increased to peak during March and April period, and May sales is expected to maintain stable or slightly fall. 8mt of ferronickel produced by Tsingshan Indonesian project in April It is informed by Indonesian Tsingshan Industrial Park, SMI and GCNS projects, the first two constructed projects in the Park hit the record high of production again at 8mt in April and delivered them all to China for self-production, which means the SMI and GCNS have reached full capacity and reached record high export. Meanwhile, the third project ITSS in the Park was constructed systematically as planned and will put into operation in end 2016 when realizes ferronickel capacity of 1.6mt (1.6mt of nickel metal). Fengzhen city 1.00Mt stainless steel project is ongoing smoothly Fengzhen city’s 1.00Mt stainless steel project, which was invested by Inner Mongolia Shangtai Industrial with 4.8bln yuan, is currently ongoing smoothly. The first stage project, with investment of 2.8bln yuan, had 6 sets of 36000KVA ferronickel furnace, refining furnace and 1.25m wideness stainless steel billet production line, which was completed and operated in October 2014. The second stage project, with investment of 2bln yuan, plans to be operated in October 2016. The project will produce 600kt of ferronickel, 1.00Mt of stainless steel after it is completed, and meanwhile achieve 15bln yuan of annual output value and 1.5bln yuan of pre-tax profit, and offer 2,000 job opportunities. Shandong Hongwang Industrial starts constructing a CR stainless steel project Shandong Hongwang Industrial started constructing the second stage project of the 1.20Mt CR stainless steel project, which was designed by BERIS Engineering and Research Corporation. The project will build 1450mm wideness stainless CR production line, which will produce 600kt of stainless CR coil.

23. Nickel & Stainless Steel Monthly, June No.61 http://www.antaike.com cmm@antaike.com 22 Brief report of an eastern steel plant bidding price A steel plant in eastern China released its high carbon ferrochrome price at 6,850yuan/50 base ton, increasing by 900yuan/ 50 base ton m-o-m, bid amount will be 1,500t. Price of low carbon ferrochrome was 11,976yuan/ 60 base ton, up by 816yuan/ 60 base ton, bid amount will be 300t. Price of micro- carbon ferrochrome was 12,850yuan/60 base ton, rising by 1,250yuan/ 60 base ton, bid amount will be 120t. Qingdao exports 502kt steel products from Jan.-Apr. According to Qingdao Customs, Qingdao exports 502kt steel products from January to April, up by 47.7% y-o-y. Exports in April reached 116kt, increasing by 37.5% y-o-y and up by 12.7% m-o-m. Besides, Qingdao exported 199kt steel bar and 187kt steel plate in the first four months. Guizhou Zhenbang resumes it high carbon ferrochrome production Guizhou Zhengbang Renewable Resource Utilization Co., Ltd completed the overhaul of its high carbon ferrochrome electric furnace and resumed production. The company has one set of electric furnace with daily output around 90t.

24. Nickel & Stainless Steel Monthly, June No.61 http://www.antaike.com cmm@antaike.com 23 Statistics Imports and Exports of Ni Products in Apr. 2016 Commodity Quantity in Apr. 2016 Quantity in Jan.-Apr. 2016 Y-o-Y Jan.-Apr. Value in Apr. 2016 Value in Jan-Apr. 2016 Y-o-Y Jan.-Apr. Import t t % USD USD % Nickel mattes 31,576 104,255,887 15.45% 53,440 209,504,483 -45.90% Refined Nickel 48,592 155,227,970 269.29% 431,575 1,378,133,258 121.03% Ni semis 1,231 4,179,822 -3.23% 30,660 128,057,067 -13.06% Other products 170 653,505 3.75% 10,621 49,210,895 -10.62% Export Nickel mattes 0 0 -100.00% 0 0 -100.00% Refined Nickel 310 1,798,401 -85.97% 3,068 18,416,246 -92.29% Ni semis 300 1,246,519 18.82% 8,404 34,017,711 3.38% Other products 54 204,699 10.03% 2,574 10,474,061 18.22% Note: 1. Figures are provided by China Customs. 2. All Imports/exports of commodity are in physical weight. Ferrochrome Bidding Prices of Baosteel, TISCO and JISCO Unit: yuan/50 base ton Date Baosteel TISCO JISCO Jun. 2015 6,400 6,200 6,400 Jul. 2015 6,350 6,150 6,150 Aug.2015 6,300 6,050 6,200 Oct.2015 6,150 5,950 6,150 Oct.2015 6,150 5,950 6,150 Nov.2015 6,000 5,700 - Dec.2015 5,620 5,420 5,417 Jan.2016 4,960 4,780 4,998 Feb.2016 4,680 4,680 4,680 Mar.2016 4,680 4,680 4,680 Apr.2016 4,780 4,680 4,680 May.2016 5,300 5,200 Jun.2016 6,280 6,180 6,180 Source: Antaike Note: 50% chrome content and payment by cash to the factory

25. Nickel & Stainless Steel Monthly, June No.61 http://www.antaike.com cmm@antaike.com 24 Chinese Nickel Ore Stockpile at 12 Main Portsides in 2015-2016 Unit: kt Date Tianjin Lianyungang Yingkou Rizhao Lanshan Tieshan Fangcheng Jingtang Caofeidian Dafeng Dongjiakou Lanqiao Total May.8 3,000 3,700 1,300 1,150 1,550 2,800 150 1,050 300 250 300 1,450 17,000 May 15 3,050 3,400 1,450 1,100 1,500 2,800 100 900 300 250 250 1,300 16,400 May 25 3,000 3,400 1,350 1,100 1,550 2,600 150 950 350 250 250 1,300 16,250 May 29 3,000 3,350 1,400 1,100 1,500 2,700 150 1,000 300 250 250 1,250 16,250 Jun. 5 3,050 3,400 1,450 1,100 1,500 2,800 100 900 300 250 250 1,300 16,400 Jun.12 2,950 3,450 1,450 1,050 1,500 2,800 50 850 300 200 200 1,350 16,150 Jun.19 3,000 3,500 1,550 1,100 1,500 2,800 50 900 350 200 150 1,300 16,400 Jun.26 2,700 3,500 1,500 1,050 1,500 2,700 100 900 400 200 150 1,300 16,000 Jul.3 2,450 3,300 1,500 1,000 1,450 2,600 100 850 300 200 150 1,250 15,150 Jul.10 2,400 3,250 1,450 950 1,450 2,700 300 850 200 200 150 1,000 15,000 Jul.17 2,400 3,400 1,400 950 1,450 2,600 400 800 200 200 150 1,000 15,500 Jul.24 2,350 3,450 1,400 900 1,400 2,600 400 1,000 200 200 150 1,300 15,350 Jul.31 2,350 3,300 1,450 950 1,400 2,600 350 1,150 250 150 150 1,400 15,550 Aug.7 2,650 3,350 1,700 950 1,400 2,650 350 1,150 250 150 150 1,150 15,000 Aug.14 2,700 3,150 1,700 1,000 1,400 2,700 350 1,200 250 150 150 1,200 15,500 Aug.21 2,700 2,900 1,700 1,000 1,400 2,850 400 1,150 250 150 150 1,300 15,950 Aug.28 2,700 3,000 1,700 950 1,550 2,950 400 1,150 250 150 150 1,250 16,200 Oct.4 3,000 3,100 1,700 900 1,6500 3,000 400 1,150 200 150 150 1,450 16,900 Oct.11 3,000 3,100 1,750 900 1,600 3,000 300 1,100 200 150 150 1,450 16,700 Oct.18 2,850 3,050 1,800 900 1,700 2,800 300 1,100 200 150 150 1,450 16,450 Oct.25 3,000 3,100 1,750 900 1,600 3,000 300 1,100 200 150 150 1,450 16,700 Oct.9 2,800 2,800 1,650 850 1,650 2,800 300 950 200 150 150 1,500 15,200 Oct.16 2,100 2,700 1,700 900 1,600 2,700 300 850 200 150 150 1,400 14,750 Oct.23 2,050 2,700 1,750 800 1,600 2,700 300 850 200 150 150 1,300 14,550 Oct.30 2,000 2,800 1,750 850 1,600 2,800 300 850 200 150 150 1,300 14,750 Nov.6 2,100 2,850 1,850 850 1,650 2,800 250 850 200 150 150 1,300 15,000 Nov.13 2,200 2,700 1,900 850 1,600 2,850 250 800 200 150 150 1,250 14,900 Nov.20 2,300 2,700 1,900 850 1,550 2,800 250 750 200 150 150 1,200 14,800 Nov.27 2,300 2,750 1,900 850 1,550 2,850 250 700 200 150 150 1,200 14,850 Dec.4 2,350 2,800 1,950 850 1,550 2,850 250 700 200 150 150 1,200 15,000 Dec.11 2,400 2,600 1,900 800 1,550 2,850 250 700 200 150 150 1,200 14,750 Dec.18 2,800 2,500 1,850 850 1,550 2,850 250 750 200 150 150 1,200 15,100 Dec.25 2,800 2,500 1,900 850 1,450 2,850 250 750 150 150 150 1,200 15,000 2016 Jan.8 2,450 2,350 1,950 850 1,450 2,850 250 750 150 150 150 1,200 14,550 Jan.15 2,400 2,100 1,950 900 1,450 2,800 250 750 150 150 150 1,200 14,250 Jan.22 2,300 1,800 1,900 900 1,450 2,800 250 750 150 150 150 1,200 13,800 Jan.29 2,250 1,750 1,850 900 1,450 2,700 250 750 150 150 150 1,200 13,550 Feb.19 2,400 1,550 1,900 850 1,400 2,700 250 750 150 150 150 1,250 12,500 Feb.26 2,450 1,500 1,850 850 1,400 2,700 250 750 150 150 150 1,250 13,450 Mar.4 2,400 1,500 1,900 800 1,400 2,650 250 750 150 150 150 1,200 13,800

26. Nickel & Stainless Steel Monthly, June No.61 http://www.antaike.com cmm@antaike.com 25 Mar.11 2,400 1,550 1,900 800 1,450 2,650 250 700 150 100 150 1,100 13,150 Mar.18 2,350 1,650 1,850 800 1,450 2,600 250 700 150 100 150 1,000 12,950 Mar.25 2,350 1,600 1,850 800 1,400 2,600 250 700 150 100 150 1,000 12,950 Apr.1 2,350 2,060 1,750 740 950 2,600 400 700 150 100 150 1,100 13,140 Apr.8 2,400 2,100 1,780 720 990 2,600 400 650 150 100 150 1,150 12,800 Apr.15 2,300 1,650 1,800 700 1,300 2,800 250 600 150 100 150 1,000 12,800 Apr.22 2,200 1,600 1,850 700 1,300 2,900 250 500 150 100 150 1,000 12,700 Apr.29 2,200 1,650 1,800 750 1,250 3,000 250 500 150 100 150 1,100 12,900 May.6 2,100 1,700 1,850 700 1,200 3,100 250 400 150 100 150 1,150 12,850 May.13 2,150 1,900 1,900 700 1,250 3,100 250 400 150 100 150 1,150 13,200 May.20 2,200 1,950 1,850 750 1,100 3,050 250 400 150 150 150 900 12,900 May.27 2,150 2,000 1,850 750 1,100 3,100 250 400 150 100 150 850 12,850

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