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. Last Updated: 07/27/2016

Norilsk Considers Cutting Exports




One of the world's leading suppliers of metals, Norilsk Nickel, is considering cutting base metal exports this year and instead supplying markets at home in Russia.


The move is likely to force up nickel prices in particular, analysts said Wednesday.


Norilsk Nickel spokesman Anatoly Komrakov said lower metals prices on world markets had prompted the company to examine export cuts in nickel, copper and cobalt.


"Production volumes will remain at previous levels, but we are looking to sell more on domestic markets and cut exports," Komrakov said.


Developments at Norilsk are watched carefully because of its position. Norilsk exports 65 percent of the world's palladium and 25 percent of its platinum, 23 percent of its rhodium and 17 percent of nickel and cobalt.


The company has no control over exports of the platinum group of metals, handled exclusively by Russia's official metals exporter Almazjuvilirexport.


On Monday, however, the importance of its supplies to world markets was evident. Palladium and platinum prices sagged in response to a statement by Almazjuvilirexport that Norilsk metal exports would resume in a month.


Norilsk officials said the company intends to develop local markets for nickel, copper and cobalt, using the connections of its biggest shareholder Uneximbank.


"There is evidence suggesting that it would be more profitable to either supply the metals to Russian producers or go into production ourselves," said Norilsk representative Igor Plotnikov.


Grant Sinitsyn, a metals analyst at United City Bank in Moscow, said the small size of the global nickel market meant that even a cutback of 5, 000 tons to 10,000 tons would impact supply.


James May, a metals analyst at Metals Bulletin Research in London, said that while a reduction in Russian copper exports had been anticipated, a fall in nickel supply could drive prices up.


"The plan to reduce nickel exports comes as a surprise because there is very little nickel consumed domestically in Russia," May said. But Plotnikov said locally produced pipes, cables and machinery made from Norilsk metals would find a ready market in some of Uneximbank's production facilities. Uneximbank has controlling stakes in oil company Sidanko, Baltic Sea shipping, and in a consortium developing a gas field near Irkutsk.


Norilsk may find a ready buyer for its nickel in the Novolipetsk steel mill, now controlled by Uneximbank after a board room coup late last year.