1、Analysis on Chinas Production, Market Demand and Price of Ferronickel by PyrometallurgyGeneral Manager: Mr.ZhongYongqi Xuzhou Jinxiang Metallurgy Co.,Ltd1、Development Status of Ferronickel2、Production of Ferronickel3、Market Demand of Ferronickel4、Analysis on Ferronickel Price5、Trend of Development o

2、f Chinas Ferronickel Industry6、Suggestion1、 Development Status of Ferronickel1 LME nickel price fluctuated severely, but generally performed upwardly.Notice：Nickel price arrived at the highest of RMB51,500 on May 9th ,2007.2 、China has outstripped Japan to be the world biggest producer of stainless

3、steel, which promotes the development of ferronickel industry.Notice：*2007 is an estimated data. Chinas Output of Stainless Steel from Jan to Sept 2007It is estimated that China already has a production capacity of 10 million tons of stainless steel. Demand for nickel has been increasingly powerful,

4、 which results in tight supply, high price and growing production.Apparent Consumption of Chinas Stainless Steel3 、Manufacturing technique of smelting ferronickel from lateritical nickel ore has gradually matured these years, with lower production cost and better quality. Ferronickel that is smelted

5、 by electric furnace could be directly used in stainless steel production. As long as theres abundant supply of nickel, stainless steel producers prefer ferronickel to electrolytic nickel and stainless steel scrap. Ferronickel has great advantage in production cost over electrolytic nickel and stain

6、less steel scrap. In China, ferronickel price is usually decided by giving a few discount based on spot nickel price, 75% for rough ferronickel and 80% for refined ferronickel, and iron element contents are not taken into consideration. Even if you purchase by spot nickel price, you can save more th

7、an RMB30,000/mt from the free iron. This is one of the reasons that most stainless steel producers prefer ferronickel at present.2、Production of FerronickelChina began to widely produce ferronickel by the end of 2005. Both the manufacturing technique and production capacity have made great progress

8、in the recent 2 years.Raw Materials for ProductionLateritical nickel ore is a main raw material both in blast furnace and electric furnace of ferronickel production. At present, China mainly imports lateritical nickel ore from Philippines, Indonesia and New Caledonia. During Jan to Sept 2007, China

9、imported 12million tons lateritical nickel ore, 6.357million tons from Philippines, 4.79million tons from Indonesia and 813,000 tons from New Caledonia. Up to October 2007, aggregate stock of lateritical in ports is 3.95million tons. China has imported 100,000 tons nickel metal, with ferronickel out

10、put about 70,000-80,000 metal tons.Chinas Import Volume of Lateritical Nickel Ore from Jan to Sept 2007Chinas Import Volume of Lateritical Nickel Ore from Jan to Sept 2007 by CountriesLateritical Nickel Ore Stocks in Chinas Main Ports on Nov 2nd 2007Potential Output of Ferronickel Based on Import La

11、teritical Nickel Ore from 2005-2008 YearsCountries2005200620072008 Philippines1.925.157.364.7 Indonesia00.243.050.3New Caledonia00.78.619.4Total（k tons）0.2626.0108.9134.4Notice: Counted as dry tons, assuming the grade of nickel ore is 1.3%, 1.5% and 2.0% for Philippines, Indonesia and New Caledonia

12、respectively. Coefficient recovery of ferronickel production is counted as 85%.Manufacturing TechniquesThere are mainly two ways of producing ferronickel: high furnace process and carbon-thermal reduction process. High furnace process use nickel ore with low nickel grade (0.9-1.5%) and high iron (20

13、-40%). It has low production cost, with a coefficient recovery of around 85%, but makes great pollution and consumes high energy, which is restricted by the government. Ferronickel produced by high furnace process usually has a nickel grade of 1.6-6%, with high P and S, which requires further refini

14、ng. At present, China has more than 25 smelters who use high furnace process, mainly located in Shanxi, Shandong, Jiangsu and Zhejiang. Carbon-thermal reduction process use nickel ore with high nickel grade (1.4% and above) and low iron (12-20%). It costs more but has a coefficient recovery of above

15、 90%, with low impurities and could be directly used in stainless steel production. Ferronickel produced by carbon-thermal reduction usually has a nickel grade above 12%. Chinese government has also restricted some electric furnace with low power. At present, electric furnace producers spread in man

16、y regions, with Sichuan has the most.A Brief Introduction to Smelting Process of Lateritical Nickel OreSinterCarbon-thermal reduction furnaceHighfurnaceBlastfurnaceRefining furnace（Eliminate impurities like S, P etc.）Base material of SS(Nickel 15%, low impurities）Electric furnace（Eliminate impuritie

17、s like S, P etc.）Low grade nickel matte（above 10）High grade nickel matte（above 10）Lateritical nickel oreElectrolyticnickelBase material of SS(8%Nickel 5%, low impurities）HighfurnaceRough ferronickel(6%nickel4%, higher impurities)Comparison of Pyrometallurgy Techniques for Lateritical Nickel OreColum

18、eBlast furnaceHigh furnaceElectric furnaceCost (RMB per ton ores)900RMB1000RMB800-1000RMBNickel grade required 1.4 0.9-1.5 1.4 Coefficient of recovery87 85 90 PollutionHighHighLowProduct Low or high grade nickel matte Rough ferronickel(4-6） Fine ferronickel（8） Use Electrolytic nickel Fine ferronicke

19、l Directly used in SS production Location Henan, Liaoning, Inner Mongolia, Hunan, SichuanHunan, Shanxi, Jiangsu, Zhejiang, ShandongSichuan, Jiangsu, Inner MongoliaDistribution Histogram of High Furnace Ferronickel SmeltersDistribution Histogram of Electric Furnace Ferronickel SmeltersDistribution Ma

20、p of Ferronickel SmeltersOutput StatisticsAccording to rough statistics, Chinas ferronickel output was about 800,000 tons in 2006. In 2007, output is expected to arrive at 1.3million tons, which equals to 110,000 tons nickel metal.3、Market Demand for FerronickelIn China, ferronickel is mainly used f

21、or austenitic stainless steel, and a few for 200 series stainless steel as well. For advantage in price, it has been widely used in stainless steel industry. It is said that ferronickel industry could develop well as long as LME nickel price stands above USD25,000 (RMB190,000). It is predictable tha

22、t nickel price will keep upward trend in the coming years. Suggest that Chinas stainless steel output arrived at above 9million tons in 2010, while austenitic stainless steel took up 60% (5.4million tons), demand for nickel metal will be more than 400,000 tons. Comparing with the present level of pr

23、oduction capacity, there would be 100,000 tons gap, which means that demand for ferronickel would be more than 2million tons in 2010. Theres no doubt that ferronickel is a sunrise industry with great potential in China.However, theres also some uncertain factors for ferronickel industry:A Industrial

24、 policy by Chinese government, especially that restricts high furnace will influence the industry.B Whether the supply and price of import lateritical nickel ore will be stable. C The developing 400 series and duplex stainless steel will influence the demand for nickel.Estimated Output of Chinas Sta

25、inless Steel from 2007 to 2010Chinas Demand for Nickel from 1999 to 2006Nickel Supply and Consumption in 2006-20074、Analysis on Ferronickel PriceFerronickel price is mainly decided by the following factors: 1 Price of nickel metal2 Price of nickel ore3 Production cost of smeltingLME Spot Nickel and

26、Ferronickel Price from Jun to Oct 2007Average Price of Ferronickel and Nickel Ore from Jun to Oct 2007We can conclude from the graphs above that as a substitute for nickel metal, ferronickel price is closely related with nickel metal price, which is just the LME nickel price. Nickel ore price also i

27、nfluences ferronickel price, but since Chinas nickel ore purchase is always based on short-term contracts, the price is also closely related to LME nickel price. In addition, price of coal, coke, electricity power and other accessories influence ferronickel price as well. Generally, ferronickel is m

28、ainly decided by LME nickel price. Producers can improve the technique or quality for better profit.5、 Influence and Trend of Development of Chinas Ferronickel IndustryInfluences:1 Demand for lateritical nickel ore grows stably. 2 Effectively ease the tight supply of nickel in China.3 The advantage

29、in ferronickel price reduces production cost of stainless steel.4 Manufacturing of ferronickel changes the pattern of nickel consumption in China, which results in lower import volume of nickel and stainless steel scrap.Pattern of Nickel Consumption in China in 2007In 2007, Chinas estimated total co

30、nsumption of nickel is about 310,000 tons, domestic output is about 120,000 tons and import volume is 85,000 tons, while the rest of 105,000 tons is all from the high quality ferronickel.Comparison of Chinas Import Volume of Steel Scrap in 2006 and 2007According to statistics by China Customs, import volume of steel scrap was 5.38million tons in 2006, decreased by 4.76million tons (47.0%). In 2007, the import volume continues to decrease. From Jan to Sept, the total import volume was 2.4246million tons, decreased by 46.83%. Development of ferronickel industry is o