interesting mkt pressures abound

Good article today on Ni PIG.
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CORRECTION: China's nickel pig iron production to slide this year -analyst
Article corrects nickel price figure in paragraph seven of original
article, published June 17.
Shanghai. June 17. INTERFAX-CHINA - China's nickel pig iron production
this year is expected to stand 8 percent lower annually at between
80,000 tons and 85,000 tons due to sluggish demand from stainless steel
mills and low nickel prices, an industry analyst told Interfax today.
"The cutting of production by Chinese stainless steel mills by 50
percent in May and another 30 percent in June have been heavy blows. The
current nickel price of RMB 185,000 ($26,843.11) per ton puts Chinese
high-cost nickel pig iron producers between a rock and a hard place,"
said Fan Runze, an analyst with Beijing Antaike Information.
China's stainless steel output this year is expected to reach 9 million
tons, up 25 percent from 2007. By comparison, output grew by 36 percent
year-on-year in 2007.
Fan believes that slowing stainless steel output growth, increasing
production of non-nickel stainless steel and the use of refined nickel
instead of nickel pig iron for production when nickel prices are low,
will all dampen nickel pig iron production this year.
China's average nickel pig iron producers have to sell their nickel
content at more than $21,000 per ton in order to make a profit,
according to Fan.
"In addition to low nickel prices, almost all nickel pig iron producers
using blast furnaces have halted production, or have turned to produce
other more profitable ferroalloys, as it is difficult for them to make
ends meet, especially when coke prices have more than doubled," Fan
said.
"If nickel prices drop to RMB 150,000 ($21,764.68) per ton, more nickel
pig iron production operations will be suspended. Current low nickel
prices have sliced off one-third of China's nickel pig iron production
capacity," Dong Shutong, chairman of Hong Kong-listed China Nickel
Resources Holdings Co. Ltd., told Interfax in Shanghai.
However, global nickel market stability cannot do without China's
100,000-ton nickel pig iron capacity. Without sufficient nickel pig iron
production, nickel prices will return to previous high levels of above
$50,000 per ton.
Three-month nickel contracts on the London Metals Exchange (LME) fell to
$21,575 per ton on June 9, their lowest level this year, before
rebounding to $24,500 per ton last Thursday, on the back of BHP
Billiton's sudden decision to bring ahead the reconstruction schedule
for its Kalgoorlie nickel smelter in Western Australia, which was
planned for next year.
The Kalgoorlie nickel smelter currently produces around 100,000 tons of
nickel-in-matte per annum. The estimated impact of the Kalgoorlie
reconstruction work on sales in 2009 is expected to be around 25,000
tons of contained nickel units, and 3,000 tons of contained nickel units
this year.
However, the rebounding LME nickel prices were only temporary, and the
three-month contracts closed $50 lower at $23,950 per ton yesterday.
Fan predicted that three-month nickel contracts on the LME will range
between $20,000 per ton and $25,000 per ton from now until September.
-GD"