The slump in nickel prices predated the economic crisis of 2008/9 by nearly a year. LME prices peaked at just over US$52,000/t in May 2007, on the back of strong demand and low stocks, but had fallen by over 80% by the end of 2008, as demand collapsed. The collapse of nickel prices and the demand from the stainless steel industry that caused it wreaked havoc on the industry and caused some profound changes in the supply market. Since then prices have recovered to stand at over US$ 20,000/t today but the story doesn’t end there. In fact, stainless and nickel demand have remained nearly constant in some geographies and dropped in others. Likewise price and volume recovery will depend upon patterns changing in both supply and demand in various parts of the world.
Even so while both demand and production of nickel declined in 2009, nickel stocks at the LME built up steadily. In January of this year, official stocks at LME warehouses totaled an excess of 160,000t. To put this into perspective, when nickel prices surged to above US$50,000/t, LME stocks totaled just 4,700t.
Nickel demand is driven by stainless steel demand and in China after a brief dip at the beginning of last year stainless production resumed its upward trend during much of 2009 and finished the year on a high. Demand from the principal applications for stainless white goods, process industries, transport and construction have remained strong in China and are recovering well in the rest of SE Asia. But in the west, stainless production is being driven initially by re-stocking of the supply chain and that has been extremely cautious during 2009 with distributors and end-users buying only as much as they need. Nevertheless prices have gradually increased each month since the summer.
Where the price goes from here will depend on a number of factors that we cover in depth in our Nickel and Stainless Steel Price Predictions price forecasts.
To learn more about our price forecasts and research you can catch us on video at the Price Forecast section of the site.