* Seasonal demand, state buying to support China imports
* Chinese nickel pig iron prices rise ahead of refined metal
* Philippine laterite ore prices more than double
* Japan's ferro-nickel makers push for long-term ore
By Polly Yam and Yuka Obayashi
HONG KONG/TOKYO, May 8 Nickel buyers in China
and Japan are scrambling to secure supplies as soaring prices
and a fear of shortages boosts demand for both refined metal and
long-term ore contracts.
The price of nickel ore from the Philippines has more than
doubled since late February, as supplies have dried up from
rival producer Indonesia, previously the world's biggest
China, the world's largest nickel consumer, has recently
increased imports of refined metal to help meet higher seasonal
demand, say trader and importers, as the price of commonly used
alternative nickel pig iron has soared since the Indonesian ban
took effect in mid-January.
Nickel demand may get a further boost from stockpiling by
China, with refined imports due to start arriving at State
Reserves Bureau warehouses before the end of June, sources with
knowledge of the matter said.
"Everybody in China is bullish nickel and everybody is
hoarding nickel of any kind," commodities strategist Ivan
Szpakowski of Citi in Shanghai said.
China, the world's largest steelmaker, has turned to
laterite nickel ores in recent years to produce nickel pig iron,
a cheap, low-grade ferro-nickel - an alloy of iron and nickel -
used in stainless steel.
Japanese stainless steelmakers rely mainly on ferro-nickel
producers and scrap for content, while other steelmakers use
refined nickel for speciality products.
Nickel users and traders in both countries built up
substantial stockpiles of ore ahead of the Indonesian ban that
should last major users until the end of the year, say traders
and industry watchers, but long-term supply is an issue.
Spot Philippine ores with 1.9 percent metal content rose
more than 120 percent between late February and end-April,
trading at $114 per wet tonne CIF China last week, traders said.
"Spot ore prices have soared this year as we compete with
Chinese makers to secure the Philippine ores," said a senior
official at Japanese ferro-nickel and stainless steel maker
Nippon Yakin Kogyo Co Ltd..
The price of nickel pig iron with 10-15 percent metal
content has risen about 20 percent since early March to about
1,350 yuan per 1 percent of metal.
This makes it more expensive than spot refined nickel prices
NI-1-CCNMM in China, which have risen nearly 40 percent this
year to about 131,750 yuan per tonne.
"We are expecting 1,400 yuan soon," said a manager at a
nickel pig iron producer. Traders said some producers were
suspending monthly deliveries to stainless steel mills, who were
resisting price hikes.
Some Chinese mills were switching to refined nickel and were
likely to lift purchases, said Wang Lixin, an analyst at
Umetal.com in China, which monitors ore imports, although this
would be gradual as mills needed to make small adjustments to
An executive at a large trading and investment firm in
Shanghai, who declined to be named, said the group had bought
2,000 tonnes of benchmark three-month LME nickel back in
April at $16,000-$17,000 per tonne.
Demand for spot refined nickel had also been increasing due
to stronger seasonal consumption, the executive said, although a
probe into the use of iron ore for financing may curb imports by
small trading firms.
In Japan, ferro-nickel producers who supply the steel
industry are seeking longer-term supply ore contacts from
Philippine miners, concerned about the possibility of a supply
shortage next year, the Nippon Yakin Kogyo official said.
An executive at another ferro-nickel maker in Japan said it
was negotiating with Philippine miners to try to revise existing
3- and 6-month contracts into longer 5-year contracts.
Japan's top makers such as Pacific Metals Co Ltd.
and Sumitomo Metal Mining Co Ltd (SMM) have also
boosted procurement of nickel ore from New Caledonia.
(Additional reporting by Melanie Burton in Sydney; Editing by