Reuters reported that China's production of nickel pig iron is likely to rise further in April and May 2010 due to increased capacity after hitting a record in March, which could trim demand for refined nickel. Ms Xu Aidong, senior analyst at state backed research group Antaike, said that nickel output from NPI hit all time level of about 17,000 tonnes in March 2010 due to the startup of new capacity and higher production at existing capacity, fuelled by strong prices. She added that "Output may rise further in April and May 2010. Output in June and the second half would depend on prices on the London Metal Exchange and in China, which consumes around a quarter of the world's nickel and produces less than it needs." In China, spot refined nickel prices have jumped nearly 36% this year to around NCY 192,000 a tonne. The price rose by 7.7% in March alone. NPI is a low grade of ferronickel in China containing as little as 1.6% of nickel and made from high iron laterite ores. NPI and refined nickel both are used in stainless steel production, of which China is the world's number one producer. NPI production in China is heavily influenced by LME and domestic prices as producers import laterite ores as feed and sell NPI in the Chinese spot market. Official data showed that China imported 3.7 million tonnes of nickel concentrates and ores in the first quarter of the year, up by 123% YoY. More than 90% of the imports were laterite ores. Increased demand from stainless steel mills in China was supporting NPI production. China has added capacity of more than 70,000 tonnes of nickel in NPI in 2010 and more will come before the end of the year. Beside NPI plants, Chinese producers are also keen to build capacity of ferronickel, nickel chrome and nickel cobalt to meet strong domestic demand.

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