Diversity in NPI Market

SHANGHAI, Jan. 14 (SMM) -- Recently, prices of NPI experienced diversity performances in spot market due to different specifications. Transactions of (10-15%) NPI and (4-6%) NPI were relatively brisk, and transactions of NPI (nickel≤2%) were relatively quiet. SMM will discuss the reasons behind the phenomena.

(10-15%) NPI

Affected by freezing weather in China, consumption of electric power set new highs consecutively in Beijing and Shanghai, and various measures of power restriction were adopted by local governments, which exerted negative effect on production of NPI.

NPI producers in Tainyuan, Shanxi province told that output of (10-15%) NPI would reduce by 2/3 in January due to negative impact of electric power restriction policy, and supply of electric power should be controlled in order to guarantee electricity supply in Beijing, Tianjin and Tangshan; producers in Yunnan province told that power restriction policy not only exerted negative impact on (10-15%) NPI producers but also exerted negative impact on (10-15%) NPI producers with blast furnace as well; producers in Shandong province also affected by power restriction policy. It could be seen that output of (10-15%) NPI suffered a big loss due to power restriction policy, which is the mainly reason behind tight supply of (10-15%) NPI. In addition, transportation bottleneck in Inner Mongolia and Ningxia as well as traditionally freezing weather were also attributed to the declined of output.  

Due to the above factors, supply of domestic (10-15%) NPI was tight recently and producers had no inventories on hand. Produces were working at full capacity and most of them received orders till February to March. Supply of (10-15%) NPI will not likely ease in the short term due to reduced supply, slower coming of Chinese New Year holiday as well as demand from # 300 stainless steel mills.

NPI (ni<2%)

Different from busy production in (10-15%) NPI market, NPI(ni<2%)market was relatively quiet. Output at NPI(ni<2%)producers with blast furnace was high and costs at NPI(ni<2%)producers were also high due to steady climb of coke. However, steel mills were hesitate to make purchase recently since # 200 stainless steel mills were mainly small and medium size enterprises, and since # 200 stainless steel market was relatively quiet recently.

A new blast furnace was put into production in Fujian Wuhang Stainless Steel Products, and a large amount of NPI would be produced out, so the company might not make purchase of NPI from the market future anymore, and the company might even sell certain amount of NPI in the market. In addition, NPI(ni<2%)producers planned to run blast furnace in spring, so most purchasers adopted a wait-and-see attitude for the expectation of lower NPI prices when large amount of NPI come into market. In this context, few producers with blast furnace already cancelled orders and halted production for maintenance given the current high costs and low selling prices.

(4-6%) NPI

Affected by purchase volumes from Taiyuan Iron & Steel (Group) Co., Ltd. (TISCO), (4-6%) NPI producers received orders till February. In addition, there was only a small amount of spot goods in the market, and producers made production according to orders they received. Since some producers with blast furnace halted production in Q3 2009, supply of goods was relatively in a small amount. Purchasing volumes from Taiyuan Iron & Steel (Group) Co., Ltd. (TISCO) were relatively stable in recent years, and trading volumes in the market were stable as a result. In this context, traded prices were relatively stable.

Generally speaking, tight supply of NPI will not be eased in the future. Decreased demand of NPI during Chinese New Year holiday in February will be offset by stock replenishment before Chinese New Year holiday. As prices of coke will continue to rise and supply of NPI may be reduced further, NPI market will improve to certain extend after the Chinese New Year holiday.

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