HONG KONG, March 27 (Reuters) - High prices of iron ore are spurring Chinese stainless steel producers to increase purchases of nickel pig iron for which iron is a free byproduct, a senior executive at Tsingshan Holding Group said on Thursday.
Tsingshan, China's top private stainless steel mill, used nickel pig iron and primary nickel to produce 600,000 tonnes of stainless steel last year without using iron ores or steel scrap, Xinfang Jiang told Reuters on the sidelines of Metal Bulletin's Asian Ferro-Alloys conference in Hong Kong.
"In the price of nickel pig iron, iron is free. That's why the use of nickel pig iron in China has risen," said Jiang, president of Shanghai Tsingshan Mineral Co. Ltd, a subsidiary of the group.
"We do not have any technical problem, and I do not believe Taigang and Baosteel would have," he said.
Shanxi Taigang 000825.SZ and Baoshan Steel (600019.SS: Quote, Profile, Research), China's two top stainless steel producers, were using more nickel pig iron to lower production costs, Jiang said.
Chinese steel mills have agreed price hikes of 65-71 percent for iron ore from Brazil's Vale (VALE5.SA: Quote, Profile, Research) for 2008 shipment and are trying to get the same hikes with Australian ore suppliers Rio Tinto (RIO.L: Quote, Profile, Research) (RIO.AX: Quote, Profile, Research) and BHP Billiton (BHP.AX: Quote, Profile, Research) (BLT.L: Quote, Profile, Research), who are asking for bigger hikes. China is the world's top producer of steel and stainless steel, for which nickel is added as an anti-corrosive and strength agent. It made 7.5 million tonnes of stainless steel last year and output is expected to rise to 9 million tonnes this year.
Nickel accounts for more than 60 percent of the cost of making the most popular 300 series of stainless steel, which contains about 9 percent of nickel.
