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China Increases Again Ratio Of 300 Series Stainless Steel Production
= Reflecting Lower Nickel Price, Ratio Of 300 Series Products Is Anticipated To Share Level Of 60% In 2008
In consequence of that, having felt a repugnance to higher nickel price, China produced more 200 series crude stainless steel (Ni-Mn based products) in 2007, the output of 300 series crude stainless steel (Ni-based products) in China for 2007 fell to a ratio of 53% of the whole but China is anticipated to recover a ratio of 300 series stainless steel to a level of 60% in 2008. This is an estimation delivered by Mr. Philip Sushchikhin, an analyst of Norilsk Nickel in Russia, at the conference held recently at Shanghai city of China.

According to this analyst, the ratio of 300 series stainless steel produced in China as of 2000 had shared 72% of the whole production but that in 2007 fell to 53%. This change of the ratio in 2007 was due to the fact that nickel price steeply rose and, as a countermeasure for this aspect, China increased their production of 200 series stainless steel to a considerable extent as a substitutive product for 300 series stainless steel.

According to the data compiled and released by The China Special Steel Producers Association, China produced 7,210,000 tons of crude stainless steel in 2007, consisting of <> 300 series products : 4,190,000 tons (shared 58.1% of the while), <> 400 series products : 1,840,000 tons (shared 25.5%) and <> 200 series products : 1,180,000 tons (shared 16.4%). At all events, it is certain that the ratio of 300 series stainless steel, as core item of nickel-based stainless steel, produced in China for 2007 had fallen to a large extent.

Owing to the fact that China was unable to increase their production of 300 series stainless steel in 2007, Chinese producers of refined nickel had faced a miscalculation of the demand for nickel from stainless steel mills but, in addition to this unfavorable aspect for Chinese nickel producers, the production of nickel-contained pig iron (including low grade ferro-nickel) has surged in China from autumn of 2005. This nickel-contained pig iron (with Ni 4 - 6%) produced in China has deteriorated in quality but lowered in price compared to that of refined nickel and an appearance of nickel-contained pig iron sold at discounted prices has caused to increase its production in China. As a matter of fact, China increased their production of nickel-contained pig iron in 2007 to a scale of 70,000 - 80,000 tons per annum of nickel content and is also anticipated to produce this nickel-contained pig iron on a scale of 100,000 tons per annum of nickel content in 2008.

China is estimated to consume 300,000 - 350,000 tons per annum of nickel and a ratio of nickel-contained pig iron shared in this nickel consumption is considerable. However, an analyst of Norilsk Nickel said that, unless a substantial innovation of metallurgical technology arises, the production of nickel-contained pig iron in China is thought to be stabilized on a scale of 100,000 tons per annum of nickel. The background is that LME nickel price has deepened a tendency to fall and a power of nickel-contained pig iron to be competitive on sales is supposed to relatively deteriorate. Main factor is the steeply risen price of coke as reducer, having caused to raise the production cost.

However, according to an opinion by Chinese producers of nickel-contained pig iron, it depends on price of nickel ore to be imported into China but, as far as nickel-contained pig iron is able to sell at US$7 - 8 per lb. (US$154,000 - 17,600 per ton) of Ni, it will be possible for China to maintain the competitive production of nickel-contained pig iron. There is a possibility that this competitiveness depends on which material do stainless steel companies of China utilize as main nickel unit. A recovery of the ratio for production of 300 series stainless steel is a good news for producers of refined nickel.

For a reference, typical specifications of nickel-contained pig iron produced in China are <> C : 3.5 - 4.0%, <> Si : 2.0 - 2.5%, <> P : 0.045 - 0.055%, <> S : 0.1 - 0.2%, <> Cr : 3.5 - 4.0% and <> Ni : 4 - 6%.

The current production of stainless steel in China is far apart from an amazing growth as seen in the past years but China is expected to produce stainless steel on a growth rate of approximately 10% per annum during a period of 2008 to 2010. If a tendency to produce more 300 series stainless steel would progress, the demand for nickel from China should have a possibility to put an influence on the world demand for nickel in 2010 and afterwards. Some of the parties concerned have an expectation, which oversupply of nickel has continued in 2007 to 2008 but this aspect will change in the near future.

For a reference, the total quantity of stainless steel produced by ten stainless steel companies of China shared 73.8% in 2006 but this share expanded to an oligopoly of 90.2% in 2007. Also, the output of stainless steel by major ten companies of China in 2007 increased to 70.9% of the whole.
last modified : Mon 30 Jun, 2008 [11:23]
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