Sorry, Nickel Miners – Here’s Why Prices Are Near 2009 Lows

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The monthly Stainless MMI® registered a value of 59 in September, a decrease of 7.8% from 64 in August.

Stainless_Chart_September-2015_FNLEver since nickel peaked in May of last year, prices have already halved this year to date. In August, prices fell as low as $9,100/metric ton, below the $10,0000/mt psychological support level. Prices now are very close of breaking the record low of $8,850/mt set in 2009. Nickel would be the first base metal to do that.

Free Download: Compare Price Trends With Last Month’s MMI Report

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. This made nickel prices fall more sharply than other metals this year, as prices were inflated after expectations of a shortfall couldn’t be met.

China Still Overproducing

As my colleague Stuart Burns pointed out recently: The pressure is on Chinese stainless producers to curb production and, although recent purchasing managers index data is encouraging for the US and Europe, growth there is unlikely to exceed the drop in Chinese demand.

With large inventory of nickel ore, of refined metal on exchanges and adequate supply of ferro-nickel, there doesn’t appear to be a strong argument for nickel prices to rise anytime soon.

Prices Are Just Information

Pundits have been suggesting that prices will rise since current prices are below the cost of production. And yes, we agree with them. The cure for low prices is always lower prices. Long-term, this causes the supply business to be less attractive, changing the supply & demand equation.

However, when will prices start reacting? That’s something that we can’t predict at this point. The truth is that investors are fearing a slowdown in China and while nickel is in the same elevator with the rest of base metals, it’s hard to tell on which floor they will get off.

In this extremely volatile market, the best thing buyers can do is to forget about predictions: Have a strategy and react on new market signals.

Need More Purchasing Information? See a Sample Of Our Monthly Metal Buying Outlook

This Month’s Prices and Trends

A 24.7% drop over the past month left Chinese ferro-moly at $9,087 per metric ton. On the LME, the nickel 3-month price closed the month at $9,865 per metric ton after dropping 9.8%. On the LME, the nickel spot price fell 9.8% to $9,830 per metric ton. A 9.3% drop left the Allegheny Ludlum 316 stainless surcharge at $0.59 per pound. After falling 7.5%, the price of Chinese primary nickel finished the month at $11,860 per metric ton. Chinese 304 stainless steel scrap prices fell 7.3% to $1,199 per metric ton. The price of Chinese 316 stainless steel scrap closed the month at $1,794 per metric ton after dropping 6.5%.

Hovering around $1,700 per metric ton for the month, Chinese ferro-chrome remained unchanged. The price of Chinese 304 stainless coil held steady around $2,616 per metric ton last month. At a price of $3,713 per metric ton, Chinese 316 stainless coil did not budge the entire 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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