【By Liu Bai, Observer News】On July 7, the UK's Financial Times reported that as the U.S. continues to escalate trade tensions, China is taking advantage of nickel prices being at a five-year low to make large purchases of this critical metal for stainless steel and electric vehicle batteries. In addition to nickel, China is also stockpiling metals such as lithium, cobalt, and copper to further enhance supply chain resilience.

According to two sources and an analysis of Chinese trade data and London Metal Exchange (LME) withdrawal data by the Financial Times, China has purchased up to 100,000 tons of nickel for national reserves since December 2024. Three other informed sources confirmed this purchase but did not provide specific figures.

Industry experts said that before this latest purchase, China's nickel reserves were estimated to be between 60,000 and 100,000 tons, meaning China may have doubled its national reserves by 2025. China typically does not regularly disclose the scale of its metal reserves.

"In recent years, the amount of nickel imported by China has increased significantly, all of which have entered the government's strategic reserve," said an industry executive.

April 18, 2025, the Weda Bay Industrial Park (WBIP) in Central Halmahera, North Maluku Province, Indonesia. This is a major nickel processing and smelting center. Visual China

The report states that China is striving to ensure supply chain security, especially amid tense relations with the United States. At the same time, nickel prices have also fallen to their lowest level since 2020. China holds a dominant position in the global supply chain of key minerals and rare earths, which is often used as leverage in trade negotiations.

Informed sources revealed that since last December, the National Food and Material Reserves Administration of China has been purchasing high-purity "Grade 1 Nickel." Grade 1 Nickel usually refers to nickel products that meet specific purity and quality standards. Generally, it has a high nickel content and low impurity content, meeting the requirements of industries that demand strict quality for nickel, such as high-end manufacturing. It is widely used in electroplating for consumer goods and aerospace, as well as the production of electric vehicle batteries.

Customs data shows that in the first five months of 2025, China's total import of pure nickel reached 77,654 tons, the highest level in the same period since 2019, doubling compared to the same period last year.

However, a senior industry analyst pointed out that the annual growth rate of Grade 1 Nickel consumption is only 5% to 10%. The International Nickel Study Group (INSG) predicts that China's total nickel demand (including lower-grade products like nickel iron) will increase by 4.9% in 2025.

An industry insider said that the discrepancy between this import growth and consumption growth is "conclusive evidence of strategic stockpiling."

A person close to a government trading partner revealed that China is also stockpiling other industrial metals. In a notice in March, China stated its intention to purchase metals such as nickel, lithium, cobalt, and copper to replenish national reserves.

Over the past two years, due to rapid expansion of Indonesian production, nickel prices have dropped by about 40%. Indonesia has the world's largest nickel reserves and controls two-thirds of global supply. Previous export control measures on raw nickel had previously affected Chinese steel mills.

"The sharp drop in nickel prices last year was actually a good opportunity to replenish national reserves," the person added.

Informed sources said that China's purchases may have also provided some support for the sluggish nickel prices. Currently, demand for nickel-based batteries is slowing globally.

Large withdrawals of Grade 1 Nickel from LME warehouses also indicate unusual trade dynamics. According to LME data, from January to June 27 this year, global buyers withdrew 78,798 tons of Grade 1 Nickel from LME warehouses, far exceeding the 17,544 tons in the same period last year, even surpassing the 44,106 tons in the entire year of 2024.

LME also said that nickel trading volume in the second quarter of this year set a record high for the quarter since early 2020.

A market analyst said, "For a long time, we have had a lot of discussions with market participants and customers about whether China is stockpiling nickel."

Informed sources also said that China most likely purchased Grade 1 Nickel from Indonesia. Over the past year, after the LME allowed refined nickel produced by Indonesian and Chinese companies to enter its warehouses, the supply of nickel from Indonesia surged. China may also have purchased it from its own production, which is not reflected in LME or import data.

This article is an exclusive contribution from Observer News. Reproduction without permission is prohibited.

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