Nickel Prices Fall as Last Month’s Gains Become a Dead Cat Bounce

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The monthly Stainless MMI® registered a value of 73 in June, a decrease of 3.9% from 76 in May.

Stainless_Chart_June-2015_FNL

After a small price increase in April, nickel prices fell again in May. Prices are now trading near their lowest levels in six years. Meanwhile, nickel inventories jumped to a fresh highs, accentuating an overhead of supply and cutting expectations of the bulls that expected a deficit to develop.

Demand Cannot Outstrip Supply

Although stainless demand is expected to grow moderately, service centers have plenty of inventory and that is putting pressure on US mills. Moreover, a stronger dollar last month sent most base metal prices down, including nickel.

Aluminum is one metal showing similar behavior. The demand outlook for both metals was quite optimistic. That brought bulls in to support prices from falling. However, the bearish commodity market (there’s a serious lack of demand) and a strong dollar made these two metals give up all their gains from 2014.

What This Means For Metal Buyers

It’s not that stainless demand is weak, it’s just far from being strong enough to overcome the excess of inventory, increased imports and a strong dollar. While the macro picture stays the same, expect prices to remain range-bound at best.

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

Primary cash nickel prices fell 8.6% on the LME to $12,670 per metric ton after rising the previous month. After rising the previous month, primary 3-month nickel prices dropped 8.5% on the LME to $12,700 per metric ton. Chinese ferro-moly prices dropped by 3.7% this month to $12,460 per metric ton. At $15,853 per metric ton, the price of Chinese primary nickel was down 2.8%. Chinese 304 stainless steel scrap prices decreased by 1.1% this month, ending at $1,471 per metric ton. Last month, Chinese ferro-chrome prices dropped by 0.9% to $1,744 per metric ton.

The Allegheny Ludlum 316 stainless surcharge increased 2.6% to $0.78 per pound.

The price of Chinese 316 stainless steel scrap held steady around $2,082 per metric ton last month. At a price of $2,685 per metric ton, Chinese 304 stainless coil did not budge the entire month. Chinese 316 stainless coil traded sideways last month, staying around $3,810 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.

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