A September Cooldown for the Hot Metals of August

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Metal Prices

Windsor/Adobe Stock

After two months of a breathtaking industrial metals price rally, September has shown pretty significant price pullbacks for August’s outperformers (nickel and copper).

Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up

Some prices have increased by more than 18% (copper) over the past two months, so these pullbacks should come as no surprise.

However, when many analysts study this kind of a chart such as the one shown below, some might scream bloody murder and declare a full on nickel bear market.

Source: MetalMiner analysis of FastMarkets

And we can’t lie — nickel prices fell sharply this month on heavy trading volumes. On the other hand, prices went up with about the same momentum last month. Now, prices appear at levels last seen in August.

Looking at the nickel outlook, rising stainless steel demand has boosted nickel prices so far. As reported by Ingrid Sternby, senior research analyst at Blenheim Capital Management, approximately two-thirds of world nickel demand comes from stainless mills.

UBS has increased its stainless demand growth to 3.5% for 2017 and 6.2% for 2018.

What is Going on With the Other Base Metals?

To better understand this short-term downtrend, let’s take a look at the price trends for other base metals.

Copper has retraced and the general downtrend has slowed down this month. However, the CRB commodities index has increased, something we had suggested might happen and something that signals a potential bull run.

Even if the chart for nickel looks bearish, some other base metals are still supporting the base metals bullish sentiment. Aluminum and zinc, which both started the rally this summer too, have shown resilience this month. Therefore, the nickel price downtrend does not equate to bearish sentiment (or changing an organization’s buying strategy).

Aluminum price. Source: MetalMiner analysis of FastMarkets

Zinc price. Source: MetalMiner analysis of FastMarkets

What Does This Mean for Buying Organizations?

Buying organizations will want to understand price signals together with trading volumes to properly react and adapt buying strategies to price changes.

MetalMiner will publish a free Annual Outlook Report this week that will summarize the drivers and price trends for 2018.

Free Download: The September 2017 MMI Report

However, consider subscribing to our Monthly Metal Buying Outlook in order to get the most out of this report and better understand the buying strategies.

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