Stainless steel scrap to weigh on high-grade NPI as China bans induction furnaces

SHANGHAI, May 28 (SMM) – Stainless steel scrap is likely to weigh on high-grade nickel pig iron (NPI) in China as additional supply, following Chinese government’s crackdown on induction furnaces, may see it increasingly used as raw materials for stainless steel, SMM believes.

Last week, the government of Dainan town in Jiangsu province announced a shutdown of induction furnaces across the region permanently from May 24. This move is set to drag down the prices of stainless steel scrap as the raw material for crude stainless steel made through induction furnaces flow into the market. This will weigh on the high-grade NPI market.

Currently, high-grade NPI accounts for the majority of raw materials used for #300 stainless steel production given its relatively low prices and growing supply from home and abroad in Indonesia. Other raw materials include refined nickel, ferrous nickel and stainless steel scrap.

Some medium and large stainless steel mills plan to use more stainless steel scrap in anticipation of lower prices, SMM learned.

Induction furnaces across Dainan produce about 100,000 mt of crude stainless steel every month with 60% of series 300. This accounts for some 6% of overall #300 output in China.

About 4,800 mt in nickel content of stainless steel scrap was estimated to be consumed every month.

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