As cost of nickel rises, steel makers look to alternatives

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Apr 26 : Posco, the world’s fourth-largest steelmaker, will increase output of a nickel-free stainless steel product fivefold by next year as the price of the ingredient rose to a record. Posco plans to sell 10,000 metric tonne a month of the product, which it introduced this month, from 2,000 tonne a month this year, the Pohang-based company said in an e-mailed statement.

The steel, which uses chromium instead of nickel, is about 2.3 million won ($2,482) a tonne, half the price of the company’s products made from so-called 300-series cold-rolled coil steel. Stainless steel users and producers are struggling to cover costs as the price of nickel has risen to a record this year, driven by surging demand led by China. The increase has prompted steelmakers to step up the search for alternatives, while mining companies have attempted to locate new sources of supply.

“We’ll have to wait and see how much demand there will be for the product,” said Chung Ji Yun, an analyst at CJ Investment & Securities Co. “Producing more 400-series that doesn’t use nickel may limit damage to Posco’s profitability in its stainless steel business.”

Posco has raised prices of stainless steel products seven times last year and four times this year because of a surge in the price of nickel, which is used to make steel rust-resistant. Stainless steel accounts for about a quarter of Posco’s sales.

The price of nickel for delivery in three months on the London Metal Exchange reached a record $50,200 a tonne on Tuesday.