LME 3M Nickel Price Skyrockets, Bodes Well For 2014 Forecast?

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With nickel prices hitting the roof very recently, it almost feels as though the rise validates MetalMiner’s monthly Stainless MMI®, which registered a value of 81 in March, an increase of 2.5 percent from 79 in February.

Stainless_Chart_March-2014_FNL

Compare with last month’s trends – here’s our free February MMI® Report.

The 3-month price of nickel on the LME closed on Friday at $15,480 per metric ton, recording a new nine-month high. After nine months of flatness, nickel is finally showing some life.

3-month LME nickel price chart

3-month LME nickel price since 2013. Source: MetalMiner IndX, MetalMiner analysis.

This move is certainly something worth watching. We might see prices strengthening in the short-term. However, does this mean that we will see higher prices through the rest of the year?

The nickel market continues to be in oversupply. Indonesia’s exports ban has so far failed to cause nickel prices to increase, probably due to China’s large stocks of nickel.

Nickel_March_2014 chart

Nickel pullbacks since 2011. Source: MetalMiner IndX, MetalMiner analysis.

We believe that the downward pressure on nickel prices is likely to be maintained through 2014. Despite the recent upward move, we would need to see further price strength to change our opinion. Since 2011, nickel prices have had several pullbacks that resumed their downtrend.

What This Means For Metal Buyers

Nickel prices are finally showing some vital signs. We might see nickel prices gaining support in the short-term, but through the rest of 2014, we still don’t see prices trading well above today’s levels.

It may behoove a purchasing organization to wait before taking long-term positions. Trying to anticipate to the market usually turns out to be a costly strategy.

Key Price Drivers of Stainless/Nickel Index

Over the month of February, the 3-month price of nickel rose 6.2 percent on the LME to $14,595 per metric ton after falling the previous month. After rising 6.2 percent, the nickel spot price finished the month at $14,540 per metric ton on the LME. The Allegheny Ludlum 316 stainless surcharge saw a 1.8 percent drift lower for the month. The Allegheny Ludlum 304 stainless surcharge saw its value rise 1.5 percent.

* Get the complete prices every day on the MetalMiner IndX℠

The price of Chinese primary nickel fell a slight 1.9 percent over the past month.

Last month was consistent for Chinese ferro-chrome and ferro-moly. Local Chinese 304 and 316 stainless steel coil and scrap prices did not budge the entire month, but dropped slightly for US-based buyers.

Don’t forget to read February 2014 MMI analysis before March’s full report comes out next week!

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.