Stainless MMI Down: Is Nickel Lagging or Leading Industrial Metals?

Our Stainless MMI took another dip in April, amid a broad sell-off in industrial metals. In addition, at the beginning of May, the Philippine parliament rejected Regina Lopez’s bid to be appointedas environmental minister. In a matter of weeks, nickel’s story has shifted from a clear supply shortfall to a rather complex narrative, ruining nickel bulls’ party.
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Nickel prices on the LME fell by 5% in the next two days after the news. We pointed out in March that a rejection would be bearish for nickel prices. Regina Lopez had previously ordered the closure or suspension of 22 of 41 operating mines in February in addition to canceling several contracts for mines that were under development.
Bears have taken on a bigger role in nickel markets on rumors that the suspended nickel mines could be reopened once a new minister is appointed. It’s still unknown whether or not that will happen, but it’s clear that miners have won an important battle in the ongoing environmental fight. Regardless of who becomes the new environmental minister, the Philippines will still go for a second review of all the country’s operating mines, including contracts for undeveloped mines. Without Regina Lopez as environmental minister, it’s quite possible that business interests will trump environmental concerns.

Indonesia Starts Shipments

In late April, around 50,000 tons of Indonesian ore arrived at a Chinese port. This is the first official arrival of Indonesian ore since the country banned ore exports back in January 2014, Reuters’ Andy Home reported. In addition, according to Reuters, Indonesian miner PT Aneka Tambang (Antam) will resume exports of nickel ore this month, “with an initial shipment of 150,000 tons expected to leave for China in early May.”
The Indonesian government had granted the company permission to ship 2.7 million tons of nickel ore. The amount is less that what the company initially requested. Antam has 5 million tons of low-grade wet nickel ready for shipments and asked for a new permit to ship an additional 3.7 million tons over the next year.
On top of that, we need to remember that more shipments of nickel ore will come along. More nickel pig iron is also being shipped from Indonesia since the country worked on building up new processing capacity in the country.

Is Nickel Lagging or Leading Industrial Metals?

Nickel has been the worst performer among industrial metals this year, down 10% in price since January. The metal also broke support levels, falling to a 10-month low. That’s not usual behavior. Meanwhile, we are witnessing price weakness across the whole industrial metal pack. It’s still early to call end on this bull market, but given the recent behavior of nickel prices, we have to wonder if investors are giving up on industrial metals as well.
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Stainless MMI and Nickel Prices and Trends

The Allegheny Ludlum 316 stainless surcharge fell 3% to $0.74 per pound. The 304 stainless surcharges fell 5% to finish at $0.57 per pound. The price of Chinese primary nickel fell 5% over the month to $11.378 per metric ton. The three-month nickel price on the LME fell 5% in March and finished at $9,525/mt.