Nickel Asia upbeat on production amid El Niño

NICKEL ASIA Corp. (NAC) expects to benefit from the El Niño weather pattern, which will positively affect its production and shipments due to lower rainfall compared to the previous year, a company official said on Tuesday.

“Last year was an outlier because we had a lot of rains and that impacted production and shipment, so this will be a reverse effect,” Andre L. Dy, vice-president for treasury, investor relations, and sales of NAC, told a briefing.

“El Niño will give us less rains so in terms of our mine planning and production, we will be able to maximize a good weather and thereby for the shipments that could be done in Palawan,” he added.

Mr. Dy said that the “underperfomance” in the production last year could be reversed into “outperformance” due to the less rains brought about by El Niño.

“We haven’t seen the full effect of El Niño, and yet the better weather has just bumped up our ore export shipments by 17% year on year,” he said.

NAC has reported a first-half attributable net income of P1.7 billion, down 56% year on year from P3.8 billion a year earlier, citing lower nickel ore price.

Revenues declined 8% year on year to P10.9 billion against the P11.8 billion in the previous year.

In the six months ending in June, NAC said that its operating mines had sold a combined 7.52 million wet metric tons of nickel ore, up 8%.

NAC saw the London Metal Exchange (LME) prices of nickel to be stable in the short term.

“We expect nickel LME prices to be stable at these price levels in the short term due to the supply-demand dynamics that we are seeing in Class 1 and Class 2 nickel,” Mr. Dy said.

“Both of which have behaved in accordance to the market supply-demand conditions,” he added.

Class 1 nickel are used in electric vehicles batteries which has higher purity compared to Class 2 that is commonly used in stainless steel production.

The average nickel LME price stood at $10.70 per pound for the first half, lower than the $12.54 per pound in the same period last year.

Mr. Dy said that the prices may rise again if the demand would continue to outweigh the supply.

“The nickel ore shipment price which is for stainless steel, we expect price to be flat in the near term. Perhaps the upside is the faster than expected China recovery along with the soft landing in the United States,” he said.

At the local bourse on Tuesday, NAC shares went down by ten centavos or 1.71% to close at P5.75 apiece. — Sheldeen Joy Talavera