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Deep Permeation Of Ni-Contained Pig Iron Into Market In China Puts Pressure On Stainless Scrap
= Gap Between Domestic Price In Japan And Price For Export To China, To Influence On Scrap Price To Import
The prices of nickel-based stainless steel scrap (new clippings) to be purchased by stainless steel companies of Japan for deliveries in November from domestic sources have shown a certain unevenness by areas and a time-lag in comparison with those in October but a reduction of Yen 20,000 per ton from that in October as intended by major stainless steel companies has been currently normalized. Accordingly, the prices of nickel-based stainless steel scrap to be paid by stainless steel mills for deliveries in November have come down to a level of Yen 135,000 - 140,000 per metric ton delivered to mills on the average.

A further reduction of price for stainless steel scrap is not seen from the beginning of this week but mills' side intends to reduce the scrap price to Yen 130,000 per ton and, therefore, it is necessary to have to keep a watchful eye on a further movement of price for stainless steel scrap in Japan. A possibility to move domestic price of nickel-based stainless steel scrap in Japan is subject to exports of this scrap for China but the negotiations with Chinese consumers on price of nickel-based stainless steel scrap are not taken place yet, resulting in a lack of the power to move domestic price of this scrap, and only the case to sound price of stainless steel scrap to be exported from Japan has been seen. In spite of this aspect, the business to export stainless steel scrap from Japan to China is not being developed yet.

According to the statistics released by the Ministry of Finance of Japan, approximately 10,000 tons per month on the average of stainless steel scrap were exported from Japan to China during March to July of 2009 but the exports have become sluggish from August in relation to the production of nickel-contained pig iron in China, which is under the way to increase.

On the occasion of that LME nickel prices have rebounded from summer of 2009, China has been clearly on a basic tone to increase production of nickel-contained pig iron and expanding sales of this product for stainless steel mills. The quantity of nickel-contained pig iron to be distributed in the market of China for 2009 is anticipated to recover to a scale of 80,000 - 100,000 tons per annum on nickel content base.

Owing to the fact that China has been importing only low grade nickel ore with 1.0 - 1.7% of Ni content from Indonesia and Philippines, China has to produce mainly low grade nickel-contained pig iron with high phosphorus and high sulphur contents by blast furnaces and to sell this product. China has been also producing high grade ferro-nickel with 10 - 20% of Ni content by electric furnaces but this product is required to secure high grade nickel ore and, from this point of view, this type of ferro-nickel produced in China is not even in its quality. This respect is a hard point to resolve.

However, a revival in production of nickel-contained pig iron in China is causing to restrict the consumption of nickel-based stainless steel scrap to be generated from domestic sources of China and, therefore, domestic price of nickel-based stainless steel scrap in China has fallen to a low level of CNY12,000 per ton (corresponding to US$1,764 included value-added tax of 13%). On the basis of this domestic price and by adding value-added tax of 13%, the price of nickel-based stainless steel scrap to be imported by Chinese consumers is necessary to be booked at a lower level than US$1,500 per metric ton CIF at least.

The business to export stainless steel scrap from Japan to China has lost its power from August of 2009 and, although the exports of stainless steel scrap from Japan to both countries of South Korea and China had once expanded , a depression in exports of stainless steel scrap from Japan is supposed to continue for the time being. Under the present situation, which domestic price of stainless steel scrap in China has been restrained to a low level, some of the parties concerned have an opinion that a recovery in exports of stainless steel scrap from Japan is anticipated to recede. A slump in exports of stainless steel scrap from Japan is supposed to accelerate a trend to reduce further domestic price of nickel-based stainless steel scrap in Japan.

For a reference, according to a presumption by a major nickel producer, the cost to produce nickel-contained pig iron in China is estimated to be US$14,300 - 15,000 per metric ton of nickel content (for product contained 5 - 10% of nickel) but the latest cost to produce low grade nickel-contained pig iron with 2% of Ni as mentioned above in China is said to be US$14,500 per metric ton on material base.
last modified : Wed 02 Dec, 2009 [10:03]
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