SHANGHAI, Apr 13 (SMM) – Nickel pig iron (NPI) is likely to account for close to 60% of the raw material supply for stainless steel from 2019, according to senior analyst of nickel at SMM, Wang Cong. The percentage has risen above 50% this year, to a level last seen in 2014.

SMM expects China’s output of stainless steel to continue to climb in 2018, Wang told delegates at the SMM CoLiNi Summit on Friday April 13 in Quzhou, Zhejiang province. Output of #400 stainless steel will be affected by imports of Tsingshan stainless steel from Indonesia. Imports of ferronickel have lost their cost advantages since the start of the year. 

Wang also said that the proportion of higher-grade nickel ore imports will increase. This improved the quality of NPI and lowered the production costs of stainless steel.

Lower costs are likely to drive up the number of NPI and stainless integration plants, Wang added. In April, integration plants produced 60% of overall high-grade NPI output and 90% of low-grade NPI output.

The cost of environmental protection across NPI plants will continue to rise. Plants along China's coastline are larger than plants farther from the coast and will incur greater costs for environmental protection. Production is hampered by environmental issues every so often but this is likely to improve as plants build and strengthen their environmental protection systems.

Wang forecast that global inventories of NPI will fall to lows similar to levels seen after China underwent major destocking in 2015-2016. Although low inventories will give some support to prices as the market declines, spot prices of NPI in 2018 are still likely to trade at wide discounts against those of nickel plates, the same as 2014.

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