Producers of an alternative to refined nickel in China are expected to cut output as prices for ore imports have nearly doubled since end-February in the wake of a ban on shipments by top exporter Indonesia.

Reduced supply of nickel pig iron could mean the world's top consumer of nickel would increase its use of the higher grade refined metal, underpinning global prices that have already risen about 16 percent this year.

China is the world's dominant producer of nickel pig iron, a low-grade ferro-nickel used in stainless steel output. It is produced from laterite nickel ores that China must import.

Prices have risen to about $90 per wet ton this week on a CIF China basis for spot Philippine laterite nickel ores with 1.9 percent metal content from about $50 in late February, said traders in China. One of them added that prices had gained 8 percent from $83 last week.

They said the climb was largely due to the Indonesian ban on exports of unprocessed metals that began in January, as Jakarta pushes to transform Southeast Asia's biggest economy into a producer of finished goods.

Supply from the Philippines, the second-largest supplier to China last year, was also restricted in the first quarter of 2014 by rainy conditions.

Chinese trading firms, typically the main importers of laterite nickel ores, have not been reselling large volumes of stocks sitting in ports in the hope of further price rises, according to traders and a manager at a nickel pig iron producer.

"Ore prices are too high," said the manager, who declined to be named as she was not authorized to talk to the media. "Nickel pig iron production is likely to be affected in coming months."

Reuters