Chinese ferroalloys producers might consider a move into
stainless steel despite continued weakness in that industry in
the first half of the year.
might look downstream due to bottlenecks, aided by an
advantageous cost position and a targeted approach in specific
markets, some industry sources said.
mills have been cutting high-grade nickel pig iron purchases
since the beginning of the year.
largest stainless steel mill, Taigang Stainless Steel Co. Ltd.,
cut its high-grade nickel pig iron buying prices by 23.3
percent to 905 yuan ($147) per tonne in July from 1,180 yuan in
January. The average operating rate for domestic nickel pig
iron smelters was around 50 percent in June vs. 70 percent in
their pressure from low prices to (nickel pig iron) smelters,
so they saved costs and still are able to make money," a
Shanghai miner source told AMM sister publication
"Rather than being
squeezed by mills, why dont ferroalloys producers extend
their industry chain and use the low-cost materials
themselves?" a Wuxi-based analyst asked.
Hongyan Ferroalloy Co.
Ltd. put a 600,000-tonne-per-year wide plate project into
production in June, shipping more than 6,000 tonnes of
stainless to the Wuxi market, market sources said.
"This is a good test
for Hongyan. They benefit from low raw material costs, and
their products are not widely seen in the current market," an
east China mill source said. "Taigang is the only producer of
wide stainless steel plate. Hongyans specific target for
the market would make it easier for them to establish a
Shengyang Group Co.
Ltd. also extended into stainless from nickel pig iron
smelting, investing 6 billion yuan ($973 million) to build an
integrated project with a 1-million-tonner stainless strip
plant and 1-million-tonne-per-year ferroalloys unit.
producers would be able to hot charge by connecting their
production of ferroalloys and stainless, they could lower costs
below those of mills, resulting in potential savings of 600 to
1,000 yuan ($97 to $162) per tonne, market sources said.
"Having two options means these privately owned companies
could make their business more flexible. They can choose either
side, depending on the market," the mill source said.
A version of this
article was first published in AMM sister publication Steel