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S. American nickel producers worried about Chinese NPI

Keywords: Tags  Brazil, China, nickel pig iron, nickel

SÃO PAULO — Rising production of nickel pig iron (NPI) in China last year has created competition for Brazilian nickel producers, market sources told AMM sister publication Metal Bulletin.

“In 2012, Chinese NPI and ferronickel production is estimated to have exceeded 300,000 tonnes, representing 20 percent of world primary nickel supply,” Rio de Janeiro-based miner Vale SA wrote in a 2012 report.

“With higher nickel prices and strong demand from the stainless steel industry, Chinese domestic production of NPI and low-grade ferronickel continues to expand,” the miner added.

This has created increased competition for the country’s nickel producers, Brazilian market sources suggest.

“When nickel prices are too high, buyers opt for nickel pig iron,” a Brazilian metallurgy executive told Metal Bulletin. “Nickel pig iron acts as a limiting factor for nickel prices.”

Nickel pig iron contains about 1.5 percent to 6 percent nickel, while ferronickel contains 10 percent to 40 percent.

Brazilian miners cite low production costs as an advantage for the industry.

“We believe our operations are competitive in the nickel market because of the high quality of our nickel products and our relatively low production costs,” Vale added.

“Nickel pig iron influences the market in Brazil if it is a cheaper option,” the Brazilian nickel unit of London-based Anglo American Plc told Metal Bulletin. “It is, however, a different product, with a lower nickel grade and without the same quality as ferronickel and nickel class 1.”

Anglo’s Brazilian subsidiary pointed out that both offers and demand look set to increase this year.

London Metal Exchange cash nickel settled at $14,495 June 11 vs. $15,050 per tonne June 7.

A version of this article was first published by AMM sister publication Metal Bulletin.

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