*Note the commentary on Nickel pig iron, wait until we are back in a balance. Funny that there would be so much capacity, so quickly, for Ni. pig iron for what really was a brief spike in Nickel prices last year??

May 29, 2008

Nickel price in China slips due to weakening demand

"Interfax China reported that decreasing nickel demand from stainless steel mills have raised market speculation that domestic nickel prices will continue to slide.

China's largest nickel and cobalt producer Gansu Jinchuan Group cut its price for 1# refined nickel by CNY 10,000 per tonne to CNY 208,000 per tonne on May 21st 2008. Jinchuan has dropped its nickel price three times in May 2008 alone. On May 8th 2008, it cuts its nickel price by CNY 7,000 and on May 15th 2008, by a further CNY 10,000.

The price of 1# nickel on the Yangtze River Nonferrous Metal Spot Market fell by CNY 1,250 to CNY 198,750 per tonne while the three month nickel price on the LME ended up 3.21% higher to USD 24,100 per tonne.

Moreover, nickel pig iron producers are finding it difficult to maintain profitability as nickel prices have taken a tumble this year. Nickel pig iron is used as a substitute for refined nickel in stainless steel production when nickel prices become too high and uneconomical for steel mills. A large amount of low grade nickel pig iron capacities came online in 2007 as Chinese stainless steel mills were not able to afford nickel prices, which were at a high at the time.

Mr Cao Kejun business manager of SUMEC International Technology Company Limited said that "Many domestic nickel pig iron producers have stopped production due to low consumption by the stainless steel market. Our sales volume of nickel pig iron has fallen this year and our company still has large nickel pig iron stockpiles."

Mr Zhou Mingjie GM of Ningbo Ouray Investment Holding Company Limited said that "Major domestic stainless steel producers will not purchase nickel pig iron in June 2008 as they still have stock, however, we expect purchases to resume in July 2008."

An official with Taiyuan Iron & Steel Group Company Limited said that in late April that the company would cut production of 300 series stainless steel products in May 2008 in order to reduce supply to the domestic market. Major stainless steel mills have slashed prices of 300 series products by as much as CNY 1,500 a tonne in May 2008 due to the market surplus."

http://steelguru.com/news/index/2008...