Tsingshan is targeting struggling copper smelters in China to produce refined nickel suitable for delivery on LME and SHFE exchanges.

Tsingshan is reported to be in talks with several struggling copper smelters in China to explore the potential of repurposing them to produce refined nickel metal. Doing so will enable it to deliver nickel on LME and SHFE exchanges and allow it to take advantage of the large premium that currently exists for refined nickel metal. The move would also replenish stocks at these exchanges that have dwindled recently and reduce the impact of future squeezes. Although this represents a novel processing route for nickel, trial demonstrations have shown its viability even considering the cost to repurpose the copper smelters.

Tsingshan has earned itself a reputation as a major market disturber since it became the world’s largest producer of refined nickel thanks to its bold investments in Indonesia. In March 2021, nickel prices plummeted after it announced it would start to convert nickel pig iron (NPI) to produce nickel matte for the EV battery supply chain. Then a year later it was involved in a short squeeze that sent the LME’s three-month nickel contract to soar to more than US$100,000/t in early March 2022. The fallout from that event is still making headlines today. 

The nickel market is currently oversupplied, although this masks the nuances in the volumes for the different forms of refined product. Class II nickel output mostly destined for the stainless steel industry is the main cause of this, with Indonesian NPI continuing to ramp up at pace.

Although this development is still at the discussion stage, Tsingshan’s proven track record for completing radical moves in the nickel industry means that market participants will certainly take this news seriously.