China’s primary nickel use in 2003 is estimated by the INSG to be 125,000 tonnes, up from 43,000 tonnes in 1997. But primary nickel use is not the full story of nickel use in China. To get the measure of China’s current use of nickel, we should include nickel units used as scrap and nickel units used as imported products. I have attempted to do this for 2003. As we have seen, primary nickel use in China was 125,000 tonnes.
According to a paper by ELG earlier this year, Chinese imports of stainless steel scrap in 2003 totalled 154,000T. Assuming average 8% nickel content, these imports contained about 12,000 tonnes of nickel. But China was also a large net importer of stainless steel semi-finished products - slabs, strip, bar, tubes - imported as raw materials for China’s fabrication and manufacturing industries. In 2003, according to the CSSC, semi-finished stainless steel imports were 2.836 million tonnes, representing about 226,000 tonnes of nickel contained, again assuming 8% nickel content.
Adding this in gives a total Chinese use of nickel units in 2003 of 363,000 tonnes, a huge amount of nickel. I did the same calculation for 1997 and got a total nickel unit use of about 86,000 tonnes. In other words, on this measure, total nickel unit use in China has quadrupled in five years!
This treatment is likely to overstate the real situation for total nickel unit use. Some of this use was ultimately exported from China as nickel-containing goods – especially as consumer goods and electronics. It also ignores the imports of low nickel stainless steel. But on the other side of the equation, I am told that, as China’s domestic demand increases, the percentage of Chinese manufactured goods that are exported is steadily decreasing. And China’s rapidly growing imports will also include a lot of capital equipment and other products that contain nickel.
So my assumption for the total use of nickel units within China itself in 2003 is in the order of 300 – 330,000 tonnes. Nickel unit use will probably continue to increase year on year in 2004 and 2005.
The exact mix between primary nickel, scrap and imported stainless steel will of course change as Chinese stainless production capacity increases. These trade changes will be difficult and will increase confusion, especially if accompanied by speculative or panic-related stocking and destocking activity. And not just stainless steel
Stainless steel is the big nickel story in China – as it is globally. But nickel use in China is based on more than stainless steel. In a recent presentation to the INSG, CRU estimated that non-stainless uses of primary nickel in China will grow at over 6% a year between 2003 and 2005, with non-ferrous alloys, plating, alloy steels and batteries all showing strong growth.