Supramaxes are queuing for a new season of nickel ore cargoes at Surigao in the Philippines, but loading has stopped and the niche trade is in danger of falling victim to the coronavirus pandemic.
Up to 800 voyages could be affected at a time when the Philippines is poised to take over from Indonesia as China’s main source of nickel ore for steelmaking.
“Previously, there have been quarantines, but now regional governors have completely shut down the nickel trade until at least April,” said another market player, a Chinese ship operator with vessels in the area.
“About five to 10 ships loaded when the season officially began this month, and I believe ships already loading will be allowed to continue, but new loadings are stopped for this month.”
Chartering brokers told TradeWinds that they expect many owners to wait at anchor in the hope that the situation will be resolved.
Nickel ore loadings had just resumed after the end of the rainy season. The trade lasts from March to October, when the danger of cargo liquefaction is considered to be lowest.
Bulkers loading from barges at the anchorages may not pose a threat of spreading contagion, but brokers and owners in the trade believe local authorities must be seen to be acting to prevent the spread of the virus.
The governors of the main nickel loading areas of Surigao del Sur, Surigao del Norte and the Dinagat Islands asked the national government in February to oversee quarantine anchorages for “Chinese mining vessels”.
Shut down
“Mining interests have a very strong influence in that region, but if the coronavirus is not contained there, the trade could be shut down for the whole year,” a source said.
A year-long closure would have serious consequences for makers of stainless steel and lithium ion batteries, which have become dependent on the Philippines and New Caledonia for nickel ore following Indonesia’s exit from the export market at the end of last year.
A certain set of shipowners are also dependent on the commodity.
Mining interests have a very strong influence in that region, but if the coronavirus is not contained there, the trade could be shut down for the whole year
Market source
Nickel ore pays a premium because of its reputation as a dangerous cargo, and attracts a number of specialist carriers to the Chinese-dominated trade.
Online vessel-tracking services show several owners with multiple supramax bulkers in the area or bound for Surigao, including Cosco, Seacon Shipping, Jiangsu Ocean Shipping and Hong Kong’s Jinhui Shipping and Transportation.
“The Philippines can dominate this trade,” said shipowner Gary Zhang Yanggao, managing director of Augustus Maritime.
He said China’s imports between 35m tonnes and 40m tonnes of nickel ore per year. Indonesia can supply ore of higher grade than the Philippines, but Indonesia is now aiming to keep its supply to itself.
“Indonesian domestic demand for nickel ore is now over 60m tonnes per year because so many smelters have been built,” Zhang said.
Augustus Maritime is active within Indonesia as an owner of domestic tonnage — including barges, a handysize bulker and a panamax — serving the nickel industry.
In international trades, the company is a pure operator, chartering in supramaxes and sometimes panamaxes to carry nickel ore from the Philippines and New Caledonia to China, and handysizes for the new Indonesian export trade in nickel pig iron and stainless steel coils to destinations worldwide.
“Based on Philippines nickel ore mining capacity, there could be as much as 700 to 800 supramax shipments per year,” Zhang said.
