Bloomberg reported that Philippine nickel ore shipments to China fell for a second month in September after demand for the metal used in stainless steel dropped.

According to Bureau of Customs data obtained by Bloomberg, exports from the southern Philippines, which accounted for more than 90% of the nation's nickel ore shipments last year, nearly halved to 326,538 tonnes in September from 595,931 tonnes a year earlier after shipments fell 59% YoY in August 2007.

Macquarie Bank Ltd’s analysts said that demand for nickel declined causing a drop in sales for nickel pig iron producers and an overhang of limonite ore stocks at Chinese ports. They added that Chinese production cuts and reduced stainless steel output has left about 4 million tonnes of limonite ore sitting at Chinese ports. The recent rally in prices may encourage some resumption of output.

Philippines is China's biggest supplier of low grade nickel ore which can be processed into pig iron containing as much as 3% nickel. China stepped up production of nickel pig iron this year after the price of nickel reached a record. But Chinese demand fell as nickel prices declined and after officials in August ordered the closure of small nickel pig iron furnaces to save energy and improve the environment.