Singapore 23/06/2016 - Chinas Tsingshan Holding Group has started up its 1-million-tonne-per-year stainless steel mill in Indonesia but uncertainty over the speed at which it will ramp up is likely to see most of its nickel pig iron (NPI) production remaining in China in the near term.
Tsingshan's stainless steel mill, which will produce high-nickel grade 300-series stainless slabs, was commissioned this week, a senior company official told FastMarkets.
But how fast the plant will be ramped up, when it will hit full capacity and where sales from the plant will be targeted is uncertain, he conceded.
"It all depends on market demand. We have no forecasts for now," he said.
The plant is set to take NPI from its production base in the Morowali district of central Sulawesi.
A second-phase expansion at its NPI project, lifting capacity by 600,000 tonnes per year (10-percent nickel content) reached full capacity this month after ramping up in recent months. This takes its NPI capacity to 900,000 tonnes per year.
The third phase of the project, which would add 600,000-700,000 tonnes per year of NPI capacity, is under construction and should hit full operations in the second half of next year.
For now, the NPI produced by Tsingshan, China's largest stainless steelmaker, is shipped back to China for its own consumption. It plans to raise its stainless steel production by 3.8 percent to 5.5 million tonnes this year.
Tsingshan last week announced the establishment of a new ferro-nickel procurement agreement with Indonesian nickel miner and ferro-nickel producer PT Aneka Tambang (PT Antam).
Under the agreement, Tsingshan will ship the ferro-nickel it procures from Antam on its own bulk vessels that it uses to transport its NPI to China.
This resulted in more than 400,000 yuan ($60,835) in savings for the company in its last quarterly ferro-nickel procurement from Antam, Tsingshan said. The agreement also provides for Tsingshan to buy more ferro-nickel from Antam if required, the official added.
"We don't have a fixed quantity that we need to buy from Antam. It is flexible and we can expand the purchase quantity if needs be," he said.
The official was unable to confirm how much ferro-nickel it buys from Antam but noted that Tsingshan itself also produces NPI in China and the amount it needs to purchase from third parties is not large.
Chinese ferronickel imports from Indonesia jumped nearly five-fold year-on-year to 255,977 tonnes in the first five months of the year, most of which are believed to be from Tsingshan's NPI project.
(Editing by Mark Shaw)