Stainless steel and nickel prices rebounded impressively this month on our index, gaining 5.6% from a low of 72 in April. The monthly Stainless MMI® registered a value of 76.
3-month London Metal Exchange nickel rose in April, after falling as low as $12,200 per metric ton, the lowest levels since 2009. Technically, this recent price increase is nothing to be concerned about, at least not yet.
Nickel prices fell as much as 40% from October to April, so a 5.6% increase this month seems just like a normal price reaction after a significant fall.
For the first time in 9 months a weaker dollar and more stable oil prices are giving some short-term momentum to commodity prices. Nickel certainly benefited from this in April, as did most of the base metals we track. If weakness in the dollar continues, nickel prices could keep rising in this second quarter but momentum will likely vanish before prices are able to make a significant move.
Demand Not Helping Prices
End-market demand seems to be robust in markets such as automotive and residential appliances, although it’s still weak in the energy market due to low oil prices. However, a moderate growth in stainless steel demand won’t likely help move prices up too much this year. Service centers have excess inventory and that is putting pressure on US mills. This glut of inventory is a big contrast from last year when lead times went above the standard, causing service centers to look for alternative sources.
As my colleague Katie Benchina Olsen pointed out recently, until service centers reduce their inventory backlogs and nickel prices start to improve, service centers will not buy, regardless of price. Service centers need to focus on getting their inventories in check before they resume anything resembling regular buying patterns. However, the mills are under pressure to book capacity and that could put more pressure on prices if they are not able to think longer-term.
What This Means For Metal Buyers
Nickel prices went up this month, but that should not panic nickel buyers. Prices could keep rising in the second quarter as the dollar weakens yet the outlook for the balance of the year remains bearish.
The nickel spot price rose 11.3% on the LME to $13,860 per metric ton after falling the previous month. After dropping the previous month, the nickel 3-month price prices rose 10.8% on the LME to $13,880 per metric ton. The price of Chinese primary nickel rose 4.5% to $16,345 per metric ton after falling the previous month. After dropping the previous month, the price of Chinese ferro-moly prices rose 0.6% to $12,976 per metric ton.
A 6.7% drop left the Allegheny Ludlum 316 stainless surcharge at $0.76 per pound.
At a price of $1,765 per metric ton, Chinese ferro-chrome did not budge the entire month. Chinese 304 stainless steel scrap held pat last month at $1,491 per metric ton. The price of Chinese 316 stainless steel scrap held steady around $2,087 per metric ton last month. Prices for Chinese 304 stainless coil remained constant this past month, holding at around $2,692 per metric ton. Last month was consistent for Chinese 316 stainless coil, which did not move from $3,820 per metric ton.
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.