Nickel Closes Lower On LME, Still Stockpile Concerns Are Receding

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Analysts recently said concerns about rising stockpiles of nickel outside China have been overplayed.

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Nickel stocks in LME registered warehouses hit a record of nearly 318,000 tons on Friday, up from 262,000 tons at the start of the year and 12 percent since the middle of June, the Financial Times reported.

About half of the current inventory is in the LME’s warehouse in Jahor, Malaysia. Strong inflows have also been recorded into warehouses in South Korea. As such, analysts believe part of the recent rise in stocks is due to metal leaving China following the discovery of a metal financing scandal in the port city of Qingdao.

“For non-specialist investors this [rise in stocks] doesn’t seem to indicate the market is tightening significantly. But we know from looking at a lot of other indicators it has,” David Wilson, an analyst at Citi, told the FT, noting that scrap nickel in Europe fetches 83-86 percent of the LME price, up from 75 percent at the start of the year. In Asia, scrap discounts are reckoned to be even narrower at 90 per cent of the LME price.

On Monday, August 4, the day’s biggest mover was the spot price of nickel, which saw a 2.6 percent decline on the LME to $18,275 per metric ton. The 3-month price of nickel saw a 2.3 percent decline on the LME to $18,350 per metric ton. The Indian nickel cash price declined 0.9 percent to INR 1,130 ($18.58) per kilogram.

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Chinese stainless steel prices closed flat for the day. The price of Chinese ferro-chrome remained essentially flat at CNY 8,300 ($1,343) per metric ton. The price of Chinese ferro-moly continues hovering around CNY 145,000 ($23,463) per metric ton for the fifth day in a row.

The Allegheny Ludlum 316 stainless surcharge saw little movement at $1.28 per pound. The price of Chinese 316 stainless coil held steady at CNY 26,000 ($4,207) per metric ton. The price of Chinese 304 stainless coil was unchanged at CNY 16,400 ($2,654) per metric ton. The price of Chinese 316 stainless steel scrap remained essentially flat at CNY 16,100 ($2,605) per metric ton. The price of Chinese 304 stainless steel scrap saw essentially no change for the fifth day in a row, remaining around CNY 16,400 ($2,654) per metric ton.

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