Reuters reported that as China's struggling stainless steel producers rush to cut costs in the face of easing demand, the Philippines' Nickel Asia Corp is seeing increasing volumes as a low cost producer of ore for nickel pig iron.
Nickel Asia, whose shares are a standout in the resources sector with a 37% rise so far this year, is one of the world's lowest cost producers of nickel laterite ore, found predominantly in the Philippines and Indonesia.
Mr Dennis Zamora, Senior Vice President for Marketing & Strategic Planning, said in an interview that "Volumes are still good and volumes are increasing. We are still operating at a profit because our costs are generally low.”
Nickel Asia's ore is shipped mainly to China customers, including the biggest listed steelmaker Baosteel, where it is mostly used to produce nickel pig iron, a low grade ferro-nickel used in stainless steel production.
Increased use of cheaper nickel pig iron has put pressure on nickel prices, which have fallen about 15% so far this year after declining for the past 2 years.
However, appetite for both nickel pig iron and nickel is expected to fall in the next 3 months as China's stainless steel mills slow production due to reduced demand over summer.
Mr Zamora said that "You can't shield yourself from the market conditions. We are affected by the LME price. As long as we are operating at a profit, we don't intend to change our shipment strategy.”
He said that market forecasts generally indicated a surplus of nickel in the market over the next 2 to 3 years, which would reduce the advantage of nickel pig iron, but he expected nickel deficits to appear from 2015 or 2016.
At the same time, Indonesia has announced plans to restrict unprocessed mineral exports from January 2014, which could boost demand for product from the Philippines.
