Chinese Smelters Skirt Malaysian Ore Ban by Making Nickel Pig-Iron Even Piggier

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Chinese nickel pig iron producers are aiming to get around an Indonesian ban on nickel ore exports by buying a shipment of slightly lower grade material and labeling it as “iron ore,” two Chinese industry sources told Reuters.

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Market talk of the move at a time of weak seasonal demand has curbed Chinese buying of nickel ores from rival supplier the Philippines, traders said, and helped depress ore prices that have already fallen from record levels in May.

“The sign of a supply rise from Indonesia has helped push down nickel ore prices,” a source with direct knowledge of the shipment at a Chinese nickel pig iron maker, whose firm imported Indonesian ores before the ban, told Reuters.

China imported 6.1 million tons of nickel ore in January 2014 from Indonesia, which banned ore exports in mid-January, part of a move to force miners to build processing plants and smelters within the Southeast Asian nation.

Reuters’ two trading sources said Chinese importers had now bought ore with low nickel and high iron content, and were labeling it as “iron ore” for export. The first such shipment was set to leave for China this week, they said. They did not disclose the identity of the buyers.

The day’s biggest mover was the cash price of primary Indian nickel which dropped by 0.7 percent on Thursday, July 17 to close at INR 1,161 ($19.33) per kilogram. The spot price of nickel declined 0.3 percent on the LME to $19,190 per metric ton, after two days of improvement. After improving for two days, the 3-month price of nickel declined 0.2 percent on the LME to $19,280 per metric ton.

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Chinese stainless steel prices were flat for the day. The price of Chinese ferro-chrome continues hovering around CNY 8,300 ($1,338) per metric ton for the fifth day in a row. The price of Chinese ferro-moly remained essentially flat at CNY 145,000 ($23,374) per metric ton.

The Allegheny Ludlum 316 stainless surcharge saw essentially no change for the fifth day in a row, remaining around $1.31 per pound. The price of Chinese 316 stainless coil held steady at CNY 26,000 ($4,191) per metric ton. The price of Chinese 304 stainless coil saw essentially no change for the fifth day in a row, remaining around CNY 16,400 ($2,644) per metric ton. The price of Chinese 316 stainless steel scrap held steady at CNY 16,100 ($2,595) per metric ton. The price of Chinese 304 stainless steel scrap continues hovering around CNY 16,400 ($2,644) per metric ton for the fifth day in a row.

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