The monthly Stainless MMI® registered a value of 73 in June, a decrease of 3.9% from 76 in May.
After a small price increase in April, nickel prices fell again in May. Prices are now trading near their lowest levels in six years. Meanwhile, nickel inventories jumped to a fresh highs, accentuating an overhead of supply and cutting expectations of the bulls that expected a deficit to develop.
Demand Cannot Outstrip Supply
Although stainless demand is expected to grow moderately, service centers have plenty of inventory and that is putting pressure on US mills. Moreover, a stronger dollar last month sent most base metal prices down, including nickel.
Aluminum is one metal showing similar behavior. The demand outlook for both metals was quite optimistic. That brought bulls in to support prices from falling. However, the bearish commodity market (there's a serious lack of demand) and a strong dollar made these two metals give up all their gains from 2014.
What This Means For Metal Buyers
It's not that stainless demand is weak, it's just far from being strong enough to overcome the excess of inventory, increased imports and a strong dollar. While the macro picture stays the same, expect prices to remain range-bound at best.