Can Nickel Prices Find A Floor?

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The monthly Stainless MMI® registered a value of 92 in November, a decrease of 3.2% from 95 in October.

Nickel fell again in October but the drop wasn’t as significant as in September and recent price movements are telling us that prices might be finding a floor.

Stainless_Chart_November-2014_FNL

As we pointed out last month, prices have fallen significantly since September but this move is not that strange considering that nickel is still up for the year. If we look back, we haven’t seen nickel come back up after sharp declines like this one during 2009-2011. Moreover, we need to take into account that a strong dollar is driving commodities down and that is also putting pressure on nickel. Finally, we haven’t seen heavy trading volume in this decline, which might mean that the decline is not as serious as it seems and is due for recovery.

Fundamentally different perspectives could be taken. On one side, some would argue that the shortage is not as bad as expected, as China’s imports remain strong and LME inventory levels are at high levels.

On the other hand, some would argue that half of the ore that China stockpiled before the ban is already gone and that inventories are just flowing from non-transparent to transparent warehouses. In either case, it wouldn’t be the first time that we see prices rising while inventory levels are high.

Whether the shortage is significant or not is hard to tell. It is even harder to try to guess how the market is going to take that information and what’s already discounted in the price.

In our view, nickel deserves some credit and unless nickel falls bellow January’s price levels, we are not turning bearish yet. Its upside potential seems limited until the commodities market recovers but we wouldn’t be surprised to see nickel coming back up in the coming months.

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A 14.8% decline for the Allegheny Ludlum 316 stainless surcharge left it at $1.06 per pound. A 4.2% drop on the LME left the nickel 3-month price at $15,890 per metric ton. After falling 4.2%, the nickel spot price finished the month on the LME at $15,810 per metric ton.

Last month was consistent for Chinese ferro-chrome, which did not move from $1,351 per metric ton. Chinese ferro-moly held pat last month at $23,609 per metric ton. At a price of $21,012 per metric ton, the price of Chinese primary nickel did not budge the entire month. Prices for Chinese 304 stainless steel scrap remained constant this past month, holding at around $2,670 per metric ton. Hovering around $2,621 per metric ton for the month, Chinese 316 stainless steel scrap remained unchanged. Chinese 304 stainless coil traded sideways last month, staying around $2,670 per metric ton. The price of Chinese 316 stainless coil held steady around $4,233 per metric ton last month.

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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