The monthly Stainless MMI® registered a value of 64 in August, a decrease of 5.9% from 68 in July and another all-time low in this month where all but one index we track fell to, what we hope, is a new bottom.
Ever since nickel broke a key support level back in March prices have done nothing but free fall, putting nickel at its lowest level since 2009.
Not only nickel but aluminum, copper and tin have also fallen to levels not since 2009. No one can deny the strong relationship among industrial metal prices.
What a Difference a Year Makes
Just about a year ago, nickel miners were rubbing their hands in glee, expecting that the Indonesian export ban would put the market in deficit. However, Philippine suppliers have taken up the shortfall. Moreover, a strong dollar, record nickel stockpiles and weaker than expected demand from China helped in the decline.
The slump in prices now has nickel miners rethinking output. Australian miner Mincor Resources said in July that it will reduce production by 56% during the second half, as its operations can’t be sustained at current price levels.
Poseidon Nickel, another Australian miner also gave in after saying that its Lake Johnson mine would be put into care and maintenance.
Many are arguing that prices will rise since they are below producers’ costs, however, we have previously pointed out that production costs do not determine prices, investors do.
What This Means for Stainless Steel Buyers
We recommend our readers be careful when fishing for a price bottom based on production costs. With commodity prices falling across the board, and weak demand from key consumer China, we might see a few more closures before the upside comes.
The Allegheny Ludlum 316 stainless surcharge fell 16.6% to $0.65 per pound. The price of Chinese primary nickel declined 7.2% over the month to $13,156 per metric ton. After falling 6.6%, the nickel spot price finished the month on the LME at $10,900 per metric ton. A 6.6% decline for the 3-month price of nickel on the LME left it at $10,940 per metric ton. Chinese 304 stainless steel scrap closed the month at $1,327 per metric ton after dropping 2.4%. Chinese 316 stainless steel scrap fell a slight 1.6% over the past month to $1,970 per metric ton.
Last month was consistent for Chinese ferro-chrome, which did not move from $1,745 per metric ton. At a price of $12,384 per metric ton, Chinese ferro-moly did not budge the entire month. Hovering around $2,686 per metric ton for the month, Chinese 304 stainless coil remained unchanged. The price of Chinese 316 stainless coil held steady around $3,812 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.