Prices for Low Grade NPI and Nickel Ore Slip Due to Sluggish Conditions in #200 Stainless Steel Sector

SHANGHAI, Dec. 6 -- According to sources from SMM, low grade NPI market prices continued to stagnate during the 2H 2010.

Offers for (1.6-1.7%) NPI were between RMB 3,100-3,150/mt on December 1st, down by RMB 60/mt.
 
Most (1.6-1.7%) NPI producers in Shandong province halted production due to electricity restrictions, leading to limited supply of (1.6-1.7%) NPI in markets. Demand for (1.6-1.7%) NPI, however, was even weaker due to sluggish conditions at #200 stainless steel mills. Exacerbating the situation is the fact that some #200 stainless steel mills produce (1.6-1.7%) NPI internally, further reducing demand for (1.6-1.7%) NPI.  Market sources are reporting that major #200 stainless steel producers, including Fujian Wu Hang Stainless Steel Products, Tsingshan Holding Group, and China Southeast Special Steels Group, have already invested in and constructed blast furnaces for the production of (1.6-1.7%) NPI. China Southwest Stainless Steel also plans to produce (1.6-1.7%) NPI, which will significantly cut demand for (1.61.7%) NPI. In addition, most #200 stainless steel mills are private companies lacking access to loans and under these constraints, must purchase raw material on an as-needed basis to reduce working capital requirements.

Price declines in (1.6-1.7%) NPI also caused prices for (0.9-1.0%) nickel ore to fall. Currently, offers were between RMB 210-250/wmt for (0.9-1.0%) nickel ore, down by RMB 15/mt from previous average price. According to SMM sources, transactions for (0.9-1.0%) nickel ore were made at prices between RMB 220-230/mt.

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