London nickel is hovering around a 14-month low on Wednesday, as a relentless rise in exchange-held nickel stocks overshadowed expectations of a shortage of nickel ore towards the end of the year.
China’s stocks of nickel ore, used to make stainless steel, have dwindled following an export ban by Indonesia at the start of last year, raising expectations producers will have to turn to nickel instead.
LME prices jumped more than 50% early last year, but have since slumped back to trading levels in place before the ban.
“Clearly the bulls have capitulated,” strategist Daniel Hynes of ANZ in Sydney told Reuters, adding that there appeared to be no sign of nickel ore being replaced with nickel in China.
LME stocks have surged by 30% in the past six months alone, hitting a string of record highs, to around 430,000 tons.
The spot price of nickel saw the biggest decline of the day, dropping 1.2% on the LME to close at $13,875 per metric ton on Tuesday, March 3. The nickel 3-month price weakened by 1.0% on the LME, settling at $13,950 per metric ton. The Indian nickel cash price declined 1.0% to INR 881.50 ($14.24) per kilogram.
Chinese stainless steel prices were mixed for the day. The price of Chinese ferro-chrome saw little movement at CNY 10,950 ($1,745) per metric ton. For the fifth consecutive day, the price of Chinese ferro-moly held flat at CNY 82,000 ($13,065) per metric ton.
The price of Chinese primary nickel fell 1.0% to CNY 104,300 ($16,618) per metric ton. The Allegheny Ludlum 316 stainless surcharge saw little movement on Tuesday at $0.87 per pound. The price of Chinese 316 stainless coil continues hovering around CNY 23,700 ($3,776) per metric ton for the fifth day in a row. For the fifth day in a row, the price of Chinese 304 stainless coil remained essentially flat at CNY 16,700 ($2,661) per metric ton. The price of Chinese 316 stainless steel scrap held steady at CNY 13,050 ($2,079) per metric ton.