Nickel Prices Drop, But Stainless Surcharges Up on Monthly Index: What Gives?

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MetalMiner Stainless Steel Price Index Nov 2012 chart

MetalMiner’s monthly stainless steel price index dropped significantly this month on the back of falling nickel prices, as well as falling stainless pricing within the Chinese market.

real stainless steel pricing - MetalMiner IndXThe monthly Stainless MMI® registered a value of 90 in November, a decrease of 9.1 percent from 99 in October.

“But we discovered an anomaly that warrants further analysis,” said Lisa Reisman, managing editor of MetalMiner. “Domestic stainless surcharges rose while the basket of remaining metals fell across the board (with the exception of ferrochrome and ferromolybdenum, which held steady and rose respectively) including nickel, which historically drives stainless surcharges.”

“We can conclude a couple of things,” Reisman continued.

“First, that raw materials such as HRC have bottomed and started to increase and/or aerospace demand has risen,” Reisman said. Allegheny Technologies indicated as much in their most recent earnings announcement.

Overall stainless demand, however, suggests some mixed signals, such as lower demand for nuclear energy, chemical processing and jet engines — again according to ATI’s most recent earnings announcement — as well as declining absolute consumer demand, according to the Consumer Metrics Institute.

Superstorm (Hurricane) Sandy, the 2012 election, or both, may have caused demand to drop. We believe stainless, more than other metals, takes its price cues from consumer sentiment and demand.

According to the CORE report quoting Appliance Design Magazine, however, “shipments of appliances increased in September, climbing 31.9% from August and 3.8% from September 2011.”

Price Drivers of the Stainless Index Drop

The nickel 3-month price plummeted 12.2 percent on the LME over the month. Chinese primary nickel prices also dropped significantly, down 10.5 percent.

today's metal prices - MetalMiner IndXChinese 304 stainless steel coil and 304 stainless scrap both finished the month with a 3 percent decline in price. The price of Chinese 316 stainless coil drifted 2 percent lower.

The Allegheny Ludlum 304 stainless surcharge was up 3.9 percent, while the Allegheny Ludlum 316 stainless surcharge rose 2.8 percent over the past month.

The price of Chinese ferro-chrome increased 0.8 percent. The price of Korean 430 stainless steel coil rose 2.5 percent.

The Stainless MMI® collects and weights 14 global stainless steel and raw material price points to provide a unique view into stainless steel price trends over a 30-day period. For more information on the Stainless MMI®, how it’s calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.

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