Surging Nickel Prices Push Stainless Index Up 14%: Fledgling Bull Market?

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The monthly Stainless MMI® registered a value of 97 in May, an increase of 14.1 percent from 85 in April.

Stainless_Chart_May-2014_FNL

The 3-month price of nickel on the LME closed the month of April at $18,250 per metric ton. Nickel keeps reaching new heights while industrial metal prices, overall, remain low. As we warned last month:

“Nickel surged 19 percent since the start of the year, clearly outperforming the rest of the industrial metals, which seem not able to turn up. It seems that Indonesia’s export ban is raising interest in the metal, pushing prices up. This recent upturn is a near-term bullish signal, especially after a 6-month period of low volatility and market uncertainty.”

FREE Download: The full Monthly MMI® Report – covering the Stainless/Nickel markets.

Today, nickel prices are up 35 percent. Will prices rise 50, 70 or even 100 percent this year?

You know what? We don’t know – and no one else knows for certain, either. Prices will go as high as the market wants to push them. The good thing is that you don’t need to know, you just need to read the market and follow the trend.

3M LME Nickel price

3M LME Nickel price

This will be a key month to watch. Despite the poor performance of key industrial metals such as aluminum and copper, nickel has strong fundamentals that could make it fly alone; these include Russia/Ukraine tensions and an export ban in Indonesia.

Nickel is now finding strong resistance at $18,500/ton levels. If nickel breaks above those levels – which would mark a two-year high – it would confirm a new bull market and we would recommend stainless buyers hedging their longer-term stainless needs. On the other hand, prices could be topping at the area they are now. Therefore, we suggest stainless buyers keep an eye on the market and act based on the next price move.

What This Means For Metal Buyers

Nickel could be entering a new bull market. If nickel manages to break above key levels, we would expect more to come on the upside and buyers might want to act based on that.

Key Price Drivers of the Index

The price of Chinese primary nickel climbed 20.6 percent, settling at $19,931 per metric ton. Following a 18.0 percent upswing, the Allegheny Ludlum 316 stainless surcharge closed the month at $1.16 per pound. On the LME, the nickel 3-month price rose 15.8 percent over the past month to $18,250 per metric ton. The nickel spot price reached $18,175 per metric ton after a 15.5 percent increase on the LME. After rising 9.2 percent, the Allegheny Ludlum 304 stainless surcharge finished the month at $0.79 per pound.

Hovering around $1,326 per metric ton for the month, Chinese ferro-chrome remained unchanged. Chinese ferro-moly traded sideways last month, staying around $23,166 per metric ton. Chinese 304 stainless steel scrap held pat last month at $2,620 per metric ton. Last month was consistent for Chinese 316 stainless steel scrap, which did not move from $2,572 per metric ton. The price of Chinese 304 stainless coil held steady around $2,620 per metric ton last month. Chinese 316 stainless coil experienced a flat month, staying around $4,154 per metric ton.

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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