China '08 nickel imports seen flat on substitution
Tue Jan 22, 2008 7:59am EST
reuters.com
By Rujun Shen
SHANGHAI, Jan 22 (Reuters) - Chinese nickel imports are expected to be flat in 2008, as a weaker global economy keeps nickel demand in check while nickel pig iron continues to provide stainless steel makers with an alternative raw material.
China's refined nickel and alloy imports rose 8 percent in 2007, to 105,300 tonnes, while exports fell by 25 percent to 16,930 tonnes, official customs data showed on Tuesday. Matte imports also rose by nearly 8 percent. [ID:nPEK149301]
"The gap between nickel demand and supply will continue to be around 100,000 tonnes. We expect China to import about 100,000 tonnes in 2008," said Xu Aidong, an analyst with state consultancy Antaike.
Imports of nickel, mainly used in stainless steel production, dropped in the second half of 2007, due to increasing use of nickel pig iron, a cheaper alternative raw material.
"China's reliance on nickel imports is not very strong," said a trader with a large trading firm in Zhejiang.
"When nickel prices are high, users can simply switch to nickel pig iron."
Only one third of the nickel used in the stainless steel industry in China is now from refined nickel, with the rest from steel scrap and nickel pig iron, industry sources say.
But if nickel prices fell below $25,000, prices of nickel pig iron would become less attractive and users would switch to nickel, traders said.
"Slower global economy will put pressure on metal prices, which will make nickel pig iron less attractive to produce," Xu said. She forecast nickel prices will average $27,000 per tonne in 2008.
Nickel for three-months delivery on the London Metal Exchange MNI3 fell to $26,600 per tonne on Tuesday, nearly 30 percent below their level a year earlier.
But others took a grim view of China's demand for nickel.
"Imports will fall because the macro-economy and industry are both weak," said a Shanghai-based analyst.
Projections for next year's nickel demand take place against the backdrop of a possible bid by Brazilian miner Vale (RIO.N: Quote, Profile, Research) (VALE5.SA: Quote, Profile, Research) for Australian miner Xstrata (XTA.L: Quote, Profile, Research), which could create a giant controlling about 30 percent of the world's refined nickel. [ID:nL22244696]
"Since nickel pig iron has become a major source of nickel for the stainless steel industry in China, the impact of the possible merger of VALE and Xtrata wouldn't very significant, unlike that of BHP Billiton and Rio Tinto on iron ore," said Hao Peigang, a senior economist at Taiyuan Iron and Steel.
"Thanks to nickel pig iron, we have felt a lot better in nickel price negotiations in recent years."
(Editing by Chris Johnson) |
