New | China's cost-conscious steel mills tempted by lower cost refined nickel
Shift towards refined product by Chinese plants could spur more imports from Russia
China's stainless steel mills may use more refined nickel as prices of the steel-making ingredient fall below the cost of nickel pig iron, but traders play down the prospect of any spike in refined nickel demand as mills shut for seasonal maintenance.
Refined nickel contains many times more of the metal than nickel pig iron (NPI) but was previously less economical for use in stainless steel production due to its high price. That changed last week when prices of spot refined nickel in China touched a six-year low due to the slowing economy, making it cheaper than NPI.
A bias towards refined nickel by China's big stainless steel mills could fuel imports of the metal, mainly from Russia. It may also force domestic NPI producers to cut or stop output and slow ore imports from suppliers such as the Philippines.
"It is certain that [we] will use more refined nickel," said a source at a large state-owned stainless steel producer, declining to be identified.
He said the plant could change the portion of NPI and refined nickel in its stainless steel production, and would review that on a monthly basis.
But traders said the rise in demand for refined nickel might not be strong this month and next as some stainless steel mills shut for summer maintenance.