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LME Nickel Prices Fall for Three Consecutive Days, NPI Prices Resilient
Aug 5,2011 17:04CST
smm insight
NPI prices were resilient this week.

SHANGHAI, Aug. 5 (SMM) -- NPI prices were resilient this week. Earlier this week, NPI prices advanced along with LME nickel price’s climb to USD 25,000/mt mark, but NPI prices were still firm and did not fall when LME nickel prices tumbled consecutively on last Thursday and Friday.

High Grade NPI

Offers of high grade NPI were above RMB 1,700/mtu this week.  Mainstream offers of high grade nickel ore were between RMB 1,700-1,730/mtu and mainstream traded prices were in the RMB 1,680-1,710/mtu range. Prices of high grade NPI were firm, which is mainly due to short supply of high grade NPI. It was reported that supply of high grade NIP was in shortage, with slight decline in output but increasing demand reported.

According to some market players, inventories of high grade NPI at steel mills had been consumed out in May and July, and some steel mills reported zero inventories of high grade NPI, thus steel mills increased stock replenishment of high grade NPI in August. According to other sources, output of #300 stainless steel increased recently. Two large stainless steel mills were both purchasing high grade NPI in a large amount, with one of the stainless steel mill from South China and the other a private large stainless steel.
Affected by power rationing impact, output of NPI was still down slightly, despite those profits at high grade NPI producers were up in July. Based on latest result of an SMM survey, China’s total output of nickel contained in high grade NPI was 15,563.5 mt in July 2011, down by 2.15% compared to 15,905.35 mt in June.

Production costs of high grade NPI increased due to nickel ore price hike along with LME nickel price increase. Supported by high production costs, high grade NPI producers were reluctant to move goods at low prices.

Medium grade NPI:

Affected by firm high grade NPI prices, mainstream traded prices of medium grade NPI (4-6%) and (6-8%) were between RMB 1,540-1,550/mtu and between RMB 1,550-1,570/mtu respectively. Output of medium grade NPI was limited. According to a medium grade NPI producer in Shandong province, ex-works prices of medium grade NPI were at RMB 1,600/mtu this week, and spot medium grade NPI also reported supply shortage.

Low grade NPI:

Mainstream traded prices of low grade NPI (1.6-1.7%) were in the RMB 3,600-3,600/mt range, with average price up by RMB 50/mtu from a week earlier. Supply of low grade NPI was still tight. According to low grade NPI producers, orders for low grade NPI in August had already been full. According to SMM sources, only a low grade NPI producer reported that it had spot goods on hand. It was also reported that a low grade NPI producer had halted production due to environmental inspection pressure.

NPI producers were still reluctant to move goods, which is a major reason behind tight supply of NPI.  However, after LME nickel prices falling for three consecutive days, NPI producers’ confidence began to falter and wait-and-see sentiment grew, despite that most market players believe current price decline will be short-lived.

NPI price; nickel pig iron; nickel pig iron price;

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