China's nickel demand seen rising 20 pct in 2007 By Polly Yam...

China's nickel demand seen rising 20 pct in 2007

By Polly Yam
FOSHAN, CHINA, March 22 (Reuters) - China's demand for nickel
may rise 20 percent this year and output is likely to surge 36
percent amid higher production of high-iron ferro-nickel, a
senior analyst at a state-owned research group said on Thursday.
High world nickel prices could spur more ferro-alloys
producers to produce ferro-nickel, also known as nickel pig iron
that is produced from high-iron laterite nickel ores, said Aidong
Xu of research group Antaike.
World nickel prices hit a record peak of $48,500 a
tonne on March 16. They have fallen 10 percent since the peak to
$44,100 on Thursday.
Antaike forecast China's nickel consumption in 2007 would
reach 300,000 tonnes, up from 250,000 tonnes in 2006 because of
higher demand from stainless steel producers, the largest user of
nickel in China, the world's top stainless steel producer, is
expected to churn out 7.2 million tonnes of the industrial metal
in 2007, against 5.3 to 5.6 million tonnes in 2006, Xu said.
"Nickel demand could rise by about 20 percent this year," Xu
told Reuters on the sidelines of a stainless steel conference in
Foshan in China's southern Guangdong province.
She said high nickel prices could prompt stainless steel
mills to produce more low-nickel grades of 400 and 200 series.
More than 60 percent of China's stainless steel production in
2006 was nickel-based 300 series. About 22 percent was 400 series
and 15 percent was 200 series.
Battery producers might also switch part of nickel-based
output to cobalt-based batteries to avoid high production costs,
Xu said.
PRODUCTION UP, BUT IMPORTS TOO
China's nickel production may rise from 143,000 tonnes in
2006 to 194,000 tonnes in 2007.
Of the 2007 output, about 60,000 tonnes would be produced
from imported laterite ores and would be in the form of high-iron
ferro-nickel.
China produced about 30,000 tonnes of such nickel in 2006 and
Xu said the output could reach 100,000 tonnes in 2010. About 30
plants in China were producting such metal.
China's mines may only produce 86,000 tonnes of nickel in
2007 and 120,000 tonnes in 2010, Xu predicted. This would force
Chinese nickel producers, including Jinchuan Group Ltd., to
continue importing large amounts of raw materials.
Jinchuan, China's top nickel producer, imported about 40
percent of its ores and semi-processed materials for nickel
production and would produce about 110,000 tonnes of metal in
2007.
Xiangtan Huifeng Alloy Co. in Hunan province had imported
laterite ores and produced high-iron ferro-nickel since October
last year when it switched to produce ferro-nickel due to high
LME nickel prices and strong Chinese demand, general manager Lan
Guangxiang said.
"Some stainless steel mills were looking for alternatives
such as ferro-nickel using laterite ores and approached us," he
said.
Lan said the plant planned to produce 5,000 tonnes of
ferro-nickel in 2007. The ferro-nickel contained about 10 percent
of nickel and 70 percent of iron and could be used directly by
mills to produce stainless steel.
China's imports of nickel ore and concentrate surged 681
percent to 3.8 million tonnes in 2006. Imports in the first two
months of this year jumped 3,143 percent to 1.2 million tonnes.
Imports of refined nickel and nickel alloys rose 7.8 percent
to 97,324 tonnes last year and 93 percent to 4,667 tonnes in the
first two months of 2007.
((Editing by Clare Black; [email protected]; Reuters
Messaging: [email protected]; +852 2843 6933, fax
+852 2845 0636))