Does NPI (Nickel Pig Iron) Really Have A Cost Benefit?
12 December, 2013@NPI (Nickel Pig Iron) has become famous in China since 2007, and currently has a big presence to form the leading international nickel market price. This year, feed rate of the NPI has increased so as to be said it would comprise about 500,000 tonne of 1.8 million tonne of nickel supply all over the world (both pure nickel-based). LME Nickel market price seems to follow the lower limit of this NPI production cost, not to speak of 20,000 US$ per tonne, even the wall of 15,000 US$ has also been thickened. This year, the supply and demand of nickel in the world is extreme, too, but next year is expected to be more extreme than this year. Among the LME, metal with the worst performance was nickel.
@However, does NPI really have a cost benefit if itfs looked ginternationallyh, and is it a nickel raw material that has economic rationality also for stainless steel maker in the world?
@According to the experts who are related to domestic stainless steel maker and are analyzing the NPI, they said, gIt is an event inside China only. Therefs nothing new with NPI Production in RKEF, and itfs a thing that was done once by the nickel maker of Western countries. Benefits only have come by the Chinese stainless steel maker purchasing of NPI in quite low price, when the market ruling China wasnft working. In general theory,
@(1) Product price is determined by the market
@(2) Price is determined by supply and demand of each product individually, and arbitrage will come in if there is substitutability
@When there is a market liquidity, (1) and(2) will work, but the NPI of China has its market distorted. For the reason, in NPI of China, there are,
@(1) Export tax and there is no VAT refund. Within this condition, NPI is substantially impossible to be exported (*itfs around 20%, but tariff will rise further by Ni purity). There is no competition power even if itfs exported. จIn other words, it has a structure that can be used only China domestic company.
@(2) Within the condition where the foreign currency has not been liberalized, as a structural theory, there is no point even if the yuan-based cost is changed to dollar-based. (It makes sense as a short-term fact, but it will be a different argument of whether it would hold in long-term or not)
@(3) If regulations are different, then the cost will be different. Especially about the environmental regulation and financial, accounting system.
@Whether Chinese NPI can remain or not, even by competing freely with the same condition, in the end it depends on cost competitiveness of China. It is meaningless to say without verifying this, that China maker is using the NPI cheap.
@ NPI should be used more in the world if it also leads in the international market, after taking every kind of condition into account. But, experts have said that, itfs hard to say that there is a merit in the market other than China at this time.