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Ardent Listener
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 Posted - 04/03/2007 : 15:32:28
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China's Nickel Demand to Gain 29% This Year, Macquarie Says
By Chanyapr0n Chanjaroen
April 2 (Bloomberg) -- Nickel demand in China, the world's largest user of the metal, will grow 29 percent this year as its stainless-steel industry expands, Macquarie Bank Ltd. said.
Demand will rise to 320,000 metric tons in 2007, Macquarie analysts led by Jim Lennon in London said today in a weekly report. The forecast is higher that that of Beijing Antaike Information Development Co., an adviser to China's government, which predicted in January growth of 20 percent to 300,000 tons.
China overtook Japan last year as the world's largest stainless-steel producer and nickel user. Most nickel is used to make stainless steel, an alloy used in construction and kitchen appliance, and prices rose to a record last year.
Chinese stainless-steel producers including Baosteel Group Corp. are increasingly relying on so-called nickel pig iron to trim production costs, Macquarie said. The raw material is a cheaper alternative to refined nickel, and China may produce as much as 80,000 tons this year, it said.
Laterite ores, containing nickel and cobalt, are imported from the Philippines, Indonesia and New Caledonia to China. They are processed in blast furnaces to make nickel pig iron, which contains between about 1 and 3 percent nickel.
Prices for ore used to produce nickel pig iron are rising, Macquarie said. The price of limonite, a type of laterite ore, ore in the domestic market has doubled over the past year to around $128 a ton, causing a ``massive'' rise in producers' cash costs to as much as $30,000 a ton, from about $15,000 a ton, the analysts said.
Nickel for delivery in three months on the London Metal Exchange gained $1,000, or 2.2 percent, to $45,800 a ton as of 11:34 a.m. local time. The contract has advanced the most this year among the seven base metals traded on the LME, rising 37 percent.
To contact the reporter on this story: Chanyapr0n Chanjaroen in London at cchanjaroen@bloomberg.net .
Last Updated: April 2, 2007 06:40 EDT
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China's nickel demand to gain 29% this year
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Posted - 04/03/2007 : 21:31:46
