Stainless/Nickel Still a Strong Bet Despite 1.9% Monthly Decline

by on

The monthly Stainless MMI® registered a value of 101 in July, a decrease of 1.9 percent from 103 in June.

Stainless_Chart_July-2014_FNL2

The 3-month price of nickel on the LME closed the month of June at $18,800 per metric ton. Nickel is consolidating after reaching a 2-year high in May, while industrial metal prices, overall, remained at low levels. By this point, nickel/stainless buyers should have taken their risk off the table as we recommended three months ago.

3M LME Nickel since 2013

The move seems like a textbook case of consolidation that will likely be followed by another upward run. These consolidations happen very frequently due to profit taking. Investors that bought nickel at the beginning of the year are now selling and taking the gains. Trading volume in June dried up. This means that not many people are selling nickel despite its big surge. When the selling action gets exhausted (supply), new buyers jumping into nickel (demand) will overcome the selling pressure, making the metal move upwards.

Nickel was the first industrial metal to turn upward this year. We also recommended hedging palladium and last month we also warned on zinc. The fact that nickel managed to surge while the rest of industrial metals were down tells us that nickel is capable of more. Keep a close eye on aluminum and copper. An upward jump of these two metals will make the climb up a lot easier for nickel.

What This Means For Metal Buyers

There is not much to think about with Nickel. With a strong fundamental story behind it, and the technical picture still looking bullish, there is no time for guesses. Buyers should be hedged in case this base metal keeps moving its way up.

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

Chinese primary nickel prices fell 3.9 percent to $20,606 per metric ton after rising the previous month. After rising the previous month, primary cash nickel prices dropped 3.1 percent on the LME to $18,705 per metric ton. Primary 3-month nickel prices fell 2.5 percent on the LME to $18,795 per metric ton after rising the previous month. After rising the previous month, Allegheny Ludlum 304 stainless surcharge prices dropped 0.6 percent to $0.89 per pound.

For the second month in a row, the Allegheny Ludlum 316 stainless surcharge increased, rising 1.8 percent over the past month to $1.31 per pound.

The price of Chinese ferro-chrome held steady around $1,338 per metric ton last month. Chinese ferro-moly held pat last month at $23,370 per metric ton. Prices for Chinese 304 stainless steel scrap remained constant this past month, holding at around $2,643 per metric ton. Chinese 316 stainless steel scrap experienced a flat month, staying around $2,595 per metric ton. Chinese 304 stainless coil traded sideways last month, staying around $2,643 per metric ton. Hovering around $4,191 per metric ton for the month, Chinese 316 stainless coil remained unchanged.

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.

{Comments Off on Stainless/Nickel Still a Strong Bet Despite 1.9% Monthly Decline Comments Off on Stainless/Nickel Still a Strong Bet Despite 1.9% Monthly Decline}