China nickel import to rise in September

China nickel import to rise in September

On August 29 2005, industry insiders indicated that nickel import in China might rise in September to compensate for a decrease in domestic nickel production. Nickel demand in China accounts for over 10 percent of the global demand. The predicted rise in nickel import should help to support the nickel price in the international market. The nickel price in London Metal Exchange was around $14'500/mt at the beginning of the year and increased beyond $16'000/mt in March, before finally falling back to $14'500/mt levels during the summer months. In August the average price approached back to $15'000/mt level. Some industry insiders indicate that nickel supply became tight in China in July due to a decline in nickel imports. This situation, along with the growing output of stainless products, helped to push up the domestic price of nickel. Jinchuan Company's plans to stop production at its major smelting furnace from September 6th until October 11th will only exacerbate the tight supply situation. Jinchuan Company is the largest nickel producer in China, and its nickel output accounts for 75 percent of the gross output in China. The company's decision to shut down for the month-long period, excusing the overhauling works, means that China's domestic production will see a 42 million ton shortfall. Nickel output came to 479.65 million tons in China for the first half of 2005, up 14.1 percent year on year. China imported 38.41 million ton of nickel and nickel alloy in July, down 52.5 percent month on month. For the first seven months as a whole, China imported 519.67 million tons of nickel, up 78.6 percent year on year. Stimulated by booming demand in China's domestic market, China stainless steel producers have enlarged their production scale. For detail, China produced 1.69 million tons of stainless steel in the first half of 2005, up 48 percent year on year. During the same period, the country imported 1.98 million tons, up 32.7 percent year on year. Meanwhile, stainless steel consumption has been around 2.45 million tons. A manager of a stainless steel plant indicated that the speed and scale of the expansion among China's stainless steel enterprises has been too fast. The surge in output has been exacerbated by the constant flow of foreign stainless steel into the Chinese market. Fearful of losing their customers to foreign producers, China's stainless steel enterprises are unwilling to reduce production. All of the above factors should translate into an increase in nickel imports in September.