Indonesian Ore Ban Now Leading to Nickel Instability as Stockpiles Shrink

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The Indonesian ore export ban that has helped nickel’s price rise 33% this year is now at the source of wild price fluctuations this week as traders try to bet how quickly the alloying metal in stainless steel will rise on the London Metal Exchange, causing numerous market corrections.

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Record inventories around the globe of about 287,000 tonnes, massive stockpiling by China’s nickel pig iron producers ahead of the ban, and years of growing mine supply (11% per year since 2009 to 2 million tons), kept the price near financial crisis levels by the end of January. Traders only really entered panic mode when supply from the world’s largest producer Norilsk was also put in danger due to the possibility of sanctions against the Russian company over the crisis in Ukraine.

With that threat now receding and warehouse stocks still climbing, expectations were for something of a correction in the price.

The cash price of primary Indian nickel fell 3.7 percent on Thursday, June 19 to INR 1,113 ($18.60) per kilogram, making it the day’s biggest mover. The nickel 3-month price closed at $18,725 per metric ton. Following a couple days of improvement, prices fell by 1.6 percent on the LME. The nickel spot price declined 1.4 percent on the LME to $18,655 per metric ton, after two days of improvement.

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Chinese stainless steel closed mixed yesterday. The price of Chinese ferro-chrome was unchanged at CNY 8,300 ($1,332) per metric ton. For the fifth consecutive day, the price of Chinese ferro-moly held flat at CNY 145,000 ($23,274) per metric ton.

The price of Chinese primary nickel weakened by 1.9 percent, settling at CNY 126,400 ($20,289) per metric ton. The Allegheny Ludlum 316 stainless surcharge held steady at $1.29 per pound. The price of Chinese 316 stainless coil saw little movement at CNY 26,000 ($4,173) per metric ton. The price of Chinese 304 stainless coil continues hovering around CNY 16,400 ($2,632) per metric ton for the fifth day in a row. The price of Chinese 316 stainless steel scrap remained essentially flat at CNY 16,100 ($2,584) per metric ton.

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