ISRI: Future Nickel Markets – A Pessimistic Optimism

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MetalMiner’s most recent stainless price index reading.

If you’re a stainless producer, scrap buyer or stainless-buying manufacturer, it’s (hopefully) no surprise to you that the nickel market has been tanking – hard.

As the Institute of Scrap Recycling Industries (ISRI) Commodities Roundtable conference kicked off Day 1 here in Chicago, one thing was clear: the expert consensus at the Stainless/Nickel roundtable leaned toward a pessimistic optimism – or should we say an optimistic pessimism?

Either way, as we wrote in our most recent monthly metal buying outlook report for September, nickel prices have lately been chasing 2009 lows – as of yesterday, the LME 3-month price has lost 33% of its value year-to-date.

Key Facts and Figures

Salvatore Pinizzotto, director of market research and statistics at the International Nickel Study Group (co-located in Lisbon along with the International Lead and Zinc Study Group and International Copper Study Group), showed just how China-heavy the data still is. Here are just a few notable stats and numbers from what he presented:

  • More than 100,000 metric tons. That number represents the maximum discrepancy between several market analysts’ past estimates of Chinese nickel pig iron production, many within the same year; and the max discrepancy between analysts’ estimates of European nickel usage based on ‘wildly’ different estimates of scrap ratios – major points underscoring the need for accurate measurement of nickel markets
  • 52%. The percentage of global nickel usage that China accounts for in 2015, up from a mere 15% in 2005. That increase has brought Asia’s overall usage to a total of 70% of the global pie. China’s NPI production (although having fallen off throughout 2014 and into Q1 2015 due to environmental restrictions) and subsequent stainless production continue to chug along. (Pinizzotto agreed with our take that China making stainless production cuts would ultimately help the nickel and scrap markets.)
  • 325,000 tons. Roughly the total volume of ferro-nickel imported by China in the first half of 2015, a significant jump from the previous period. This is a broader testament to overstocked inventories across the board: ore surpluses, refined metal in exchange warehouses, NPI being pumped out of Chinese mills and plenty of ferro-nickel – all are conspiring to keep nickel prices low for the foreseeable future.

As I caught Pinizzotto saying at one point, “We don’t want to be too pessimistic…but we’re not that optimistic.”

Here’s my colleague Jeff Yoders’ coverage of how the stainless/nickel markets and “the China Effect” look through a US economist’s eyes – and for ferrous-market fans, read about the panelists’ latest outlook.

Need more detailed purchasing information? Get a free sample copy of our monthly metal buying outlook report – including nickel/stainless.

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