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Oversupply Of Nickel In China Is Caused By Decreased Production Of Stainless Steel
= Jinchuan Nickel Turns To Reduce Nickel Production And To Increase Copper Production
It is anticipated that China was initially expected to increase the production of crude stainless steel in 2008 by 20% from that in 2007, but this expansion of the production will retreat to a considerable extent. According to a forecast by analysts or Chinese experts, the output of crude stainless steel in 2008 will be still in the range of 7.80 - 8.20 million tons but a strong view at present is to converge upon more or less 8.00 million tons. For a reference, the production of stainless steel in China for 2007 was estimated to be 7.21 million tons (by China Special Steel Federation) to 7.35 million tons (by analysts).

This slowdown of the growth on production of stainless steel in China has caused to change the demand for nickel from this country to a large extent. Jinchuan Group Ltd., which is the largest producer of nickel in China, has turned to increase their copper production in 2008 by means of restricting capacity for nickel production. Therefore, Jinchuan Group was initially scheduled to produce 120,000 tons per annum of nickel in 2008 but is now anticipated to decrease this nickel output by 10,000 - 20,000 tons.

It was already pointed out from summer of this year that Jinchuan Group decreases nickel production (it was unable to produce nickel as planned for the first half of 2008), and it was recently known that they have converted from August of 2008 two furnaces used to refine nickel to produce more copper. By this arrangement, Jinchuan Group is expected to be able to increase their copper production by 35% to 300,000 tons per annum. However, their nickel production in 2008 will shrink to a scale of 100,000 - 110,000 tons per annum.

A slowdown of the growth on production of stainless steel in China is coming up to the market with a depression of nickel demand. Particularly, China substantially expanded from autumn of 2006 the production of nickel-contained pig iron but this change of nickel demand has hit directly the production of nickel-contained pig iron in China from summer of 2008. Owing to the fact that LME nickel prices have fallen by 30%, the operation to produce nickel-contained pig iron in China has turned to be not payable for its cost and, therefore, Chinese producers of nickel-contained pig iron have successively withdrawn from this production. Accordingly, the output of nickel-contained pig iron in 2008 was initially estimated to be 100,00 tons per annum of nickel but is now anticipated to decrease to 80,000 tons. However, China is supposed to have still held the excessive cargoes of nickel ore, which will come to 8,000,000 tons on material base and have been accumulated at wharves of discharging ports. The reduced nickel production as mentioned above has put the same impact on nickel producers in other districts of China (such as Guangxi Zhuang Aut. Region).

Owing to the unexpectedly depressed production of stainless steel, the quantity of nickel to be consumed in China for 2008 is estimated to decrease by 17,000 tons to 345,000 tons (according to an estimation by Antaike Newspaper as one of mining journals published in China). The quantities (on material base) of nickel imported into China in January - July of 2008 were <> nickel metal : 74,000 tons, <> nickel oxide : 42,000 tons and <> ferro-nickel : 37,000 tons. The total quantity on nickel content base imported into China is unable to indicate with accurate figures but is supposed to be more than 110,000 tons at present and anticipated to reach a nearer level to 200,000 tons per annum.

Antaike Newspaper has viewed that China will produce 228,000 tons of nickel in 2008 as an increase of 6% from that in 2007, and the total quantity of nickel to be supplied to China in 2008, by adding that imported into China in the year, will be inevitable to come to 428,000 tons, exceeding a scale of 400,000 tons per annum. This aspect obviously means that a map on oversupply of nickel is developing in the market of China.
last modified : Wed 24 Sep, 2008 [11:24]
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