Stainless MMI: Stainless surcharges fall, nickel prices increase slightly

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Maksym Yemelyanov/Adobe Stock

The Stainless Steel Monthly Metals Index (MMI) gained one point for a January reading of 75.

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Just a few months back, in September 2019, the index hit a five-year high of 91.

LME nickel prices increased again in the second half of December after finding support just above the $13,000/mt price level:

Source: MetalMiner analysis of the London Metal Exchange (LME) and FastMarkets

The return of some limited momentum coincided with the announcement that Indonesia will double the royalty tax on nickel exports this year, with a new rate of 10%, as we noted in the January 2020 MetalMiner Monthly Outlook report.

Additionally, the market will remain in deficit during 2020, albeit somewhat narrowed, according to forward projections from the International Nickel Study Group (INSG). This will also help support prices, especially as the INSG sees demand levels for the metal continuing to increase in 2020. The ICSG estimates total global usage of 2.52 million tons, compared to 2.45 million tons during 2019, according to projections released in October 2019.

SHFE nickel prices find new price bottom in December

SHFE nickel prices hit a new short-term bottom before taking a sideways turn.

Source: MetalMiner analysis of FastMarkets

In addition to mild price support from Indonesia’s export royalty increase, Chinese stainless steel producers continued to stockpile the metal, according to press reports.

According to the International Stainless Steel Forum (ISSF), global stainless steel melt shop production increased during the first nine months of 2019.

Global production of stainless steel totaled around 39.8 million metric tons during the first nine months, representing an increase of 3.4% compared to the same period in 2018, according to the ISSF.

On a regional basis, only China showed a year-on-year increase — of 11.7% — for the period, with production totaling  22.5 million metric tons (or around 57% of total global production).

In the U.S., production declined by around 7.5% during the first nine months of 2019, compared to 2018, with around 2 million tons produced. Production declined by 7.2% in Europe, to 5.2 million tons, and by 5.4% in Asia (excluding China and S. Korea) to 5.9 million tons during the same nine-month period.

Meanwhile, Indonesia’s coordinating minister of maritime and investment affairs commented to the press that the government-approved environmental impact studies for at least five plants, which will produce battery-grade nickel chemicals in Morowali, can proceed. Approval is required as a precursor to the continuation of the construction of high-pressure acid leaching plants.

This includes China’s Tsingshan Group, which already produces nickel pig iron and stainless steel in Morowali. Their investment partners for battery and EV development also include Chinese battery firm GEM Co Ltd, plus additional partners.

Additionally, China’s Zhejiang Huayou and partners will invest in the region, with the two separate joint venture entities generating a total of $2.3 billion in their respective factory development plans.

Domestic stainless steel market

Source: MetalMiner data from MetalMiner IndX(™)

Stainless 304 and 316 NAS surcharges dropped again and are now approaching support levels.

In early January, surcharges for NAS 304 dropped to $0.60/pound and NAS 316 dropped to $0.83/pound, compared to $0.69/pound and 0.94/pound, respectively, in December 2019.

What this means for industrial buyers

Nickel prices found a short-term bottom, then turned around in December.

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Buying organizations seeking more monthly insight into nickel price trends can learn more about our MetalMiner Monthly Buying Outlook.

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Actual stainless steel prices and trends

Primary nickel prices in India increased by 5.2% this month to $14.70/kilogram as of Jan. 1.

China’s primary nickel price increased by 2.5% to $16,285/mt, while other Chinese prices generally increased by 1.0%. China’s 316 and 304 CR Coil proved to be the exception, dropping by 5.1% and 6.0% to $2,915/mt and $2,149/mt, respectively.

The LME primary three-month nickel price increased 2.3% to $14,235/mt.

Korean prices also increased by 2.3%, with stainless steel coil 430 CR 2B and 304 CR 2B rising to $1,559/mt and $2,511/mt, respectively.

The U.S. 316 and 304 Allegheny Ludlum stainless surcharges fell by 12.4% and 13.1%, respectively, to $0.85/pound and $0.62/pound.

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