Macquarie Group Limited said that China's increased nickel imports, boosted by expanding stainless steel output and a price gap between the domestic and overseas market, have driven a rally in London prices. Macquarie analysts led by Mr Jim Lennon said in a report that China's largest stainless steel producers operated at historically high capacity usage rates of more than 95% in May, while imports surged in the second quarter as domestic nickel traded at a premium to the London Metal Exchange.
The report said that nickel gained 20% over the past two weeks to more than USD 6 a pound on the LME. China's refined nickel imports rose 16% in the first four months compared with a year earlier to 53,535 tonnes. The report said that "We hear that around 15 to 20 nickel pig iron producers have brought back production capacity since mid May with most of them producing pig iron with 10% plus of nickel content using electric arc furnaces." Mr Xu Aidong analyst at Beijing Antaike Information Development Co said on May 20th 2009 that stainless steel output from China may stay level with last year's 6.9 million tonnes, after declining in 2008.