China's nickel ore imports will slow further  in  the  second  half  of  the year as domestic nickel pig ironproducers  cut  back  production, an industry analyst told Interfax July24.

    China imported  8.76  million tons of nickel ore in the first six months of this  year,  up 26.07 percent when compared with the same period last year, though  the  country's  imports  over the month of June dropped by 41.88 percent from the previous month to 1.18 million tons.

    "China saw  big  monthly  drops  in  June  imports  of  nickel from both Indonesia  and  the  Philippines,  China's two major overseas nickel oresources,  and  sluggish  demand  from  Chinese nickel pig iron producers means that  imports  are  likely  to  continue  falling,"  Xu Aidong, ananalyst with Beijing Antaike Information, said.

    Xu predicted  that  China's nickel ore imports would amount to around 15 million tons this year, dipping 3.60 percent from last year.

    Stockpiles  of  nickel  ore in China's major ports have grown to between 8.50 million tons and 9.00 million tons.

    "Many of China's nickel pig iron producers have either cut production or halted operations  altogether because of low nickel prices, currently ataround $20,000  per ton, coupled with tight energy supplies and sluggish demand from stainless steel mills. Companies that use blast furnaces forproduction  were  hit  hardest,  as  they cannot afford the increasingly steep coke prices," Xu said.

    Domestic  stainless  steel supply has expanded following a cut in exporttax rebates  for  some  stainless  steel  products  in  July  last year.

    Production  cuts and ex-works price adjustments by stainless steel millshave failed to boost to consumption, as demand from downstream stainlesssteel consumers has fallen alongside the slowing economy.

    Xu said  that  China's  biggest  stainless  steel mill, Taiyuan Iron and Steel Group,  is  now operating at a capacity of 110,000 tons per month,which is less than 50 percent of its total capacity.

    Antaike  has  released  a  prediction  that China will have a surplus ofaround 700,000 to 800,000 tons of stainless steel this year.

    Three-month  nickel  contracts  on the London Metal Exchange closed 1.96 percent  lower  from the previous trading day at $20,000 per ton on July23, the  lowest  since  June  2006.  Spot  nickel prices on the domestic market ranged  from  RMB  154,500  ($22,621.78)  per  ton to RMB 156,000($22,841.41)  per  ton on July 24, down RMB 3,575 ($523.59) per ton fromthe previous day's trading.

    Up to 95  percent  of  China's  nickel  ore imports are laterite ore fornickel pig iron production.