China crackdown shuts some nickel pig iron plants
businessspectator.com.au
By Rujun Shen of Reuters
SHANGHAI -- Low refined nickel prices and stricter government enforcement of environmental standards have cut into profits for Chinese nickel pig iron producers, forcing some to suspend production.
Stocks of laterite ore, which generally contains low grades of nickel and significant amounts of iron, are building at Chinese ports as nickel pig iron producers reduce purchases, traders said.
"Plants around Linyi in Shandong have all been shut down. In other places, the government is shutting down plants too," one trader working for a Southeast Asian miner, told Reuters.
"The government intervention is too powerful."
China's top planning body, the National Development and Reform Commission, last August issued a circular forbidding small blast furnaces from being used for nickel pig iron.
Many small Chinese steel producers had switched to nickel pig iron following government regulations cracking down on small blast furnaces in steelmaking.
The current campaign, spearheaded by the State Environmental Protection Agency, or SEPA, is targeting blast furnaces with a volume of between 128 cubic meters and 380 cubic meters, traders said.
Many nickel pig iron producers can only break even when refined nickel prices are over $US20,000 a tonne. Nickel pig iron can be used to make low quality stainless steel more cheaply than by using refined nickel.
But although prices of nickel in London have fallen 55 per cent to $US23,325 a tonne from the record high of $US51,800 per tonne in May 2007, iron ore prices have risen sharply, spurring some Chinese stainless steel producers to buy more nickel pig iron to benefit from the iron as a free by-product.
That means business is still good for some of China's largest and most efficient nickel pig iron producers.
Zhejiang Huaguang Smelting Group, China's top producer, and Indonesian mining PT Kartika Selabumi said in January they would build a nickel smelter and coke plant on Sulawesi island, Indonesia.
The smelter would have annual production capacity of 3,500 tonnes of ferro-nickel, used in stainless steel manufacturing. Commercial production is expected to start by the end of this year. |
