Growing supply to widen discounts of high-grade NPI

SHANGHAI, Aug 7 (SMM) – Discounts of high-grade nickel pig iron (NPI) to refined nickel prices are expected to widen this month due to an increasing supply of the former, SMM believes.

Production of high-grade NPI across plants in Inner Mongolia will resume on a large scale in August as environmental restrictions eased. SMM forecasts output in Inner Mongolia to surge 127% from July to over 4,100 mt in metal content this month. This compared with a month-on-month increase of 24% in July, at some 1,800 mt in metal content. 

In Jiangsu province, while NPI plants resumed gradually from environmental suspensions, they faced fresh cut on China's Blue Skies initiative. Producers with annual coal consumption of more than 20,000 mt were required to cut production by at least 20%, from August till the end of the year. 

This is expected to bring high-grade NPI output in the area to some 7,000 mt in metal content in August, up 15% from July. The growth rate is higher from July's 11%. 

The overall production of high-grade NPI is likely to increase by over 10% this month to 33,100 mt in metal content. Output in July registered at 29,000 mt in metal content, inching up 4% from June, according to SMM data. 

On the demand front, while some stainless steel plants are expanding production of #300 products in anticipation of higher profits, two large producers are scheduled to undergo maintenance this month.

Some planned to produce more #300 instead of #200 products, on tighter supply of manganese. This is expected to raise the overall production of #300 stainless steel by 3% in August. 

As Tuesday August 7, average price of high-grade NPI stood at a discount of 54.75 yuan/mtu to the price of refined nickel. This compared with a discount of 31.2 yuan/mtu as of Friday August 3.