Stainless MMI: Index drops in January on nickel price weakness

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The Stainless Steel Monthly Metals Index (MMI) gave up five points this month, setting the value back to 70.

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LME nickel prices dropped slightly below the $13,000/mt price level in late January when industrial metals prices, generally speaking, declined as markets reacted to China’s coronavirus situation.

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

Subsequently, within a week or so, the price increased to the $13,000/mt price level, indicating future upside price risk cannot be ruled out entirely.

However, until stronger demand emerges from key consuming sectors — which looks like it will most likely be delayed until Q2 — prices could move sideways from here and continue to trade around the $13,000/mt price level.

SHFE nickel prices drop while still maintaining some sideways traction

During January 2020, SHFE nickel prices also slipped lower than December 2019 values, while holding near long-term support levels.

Source: MetalMiner analysis of FastMarkets

China’s current coronavirus situation could potentially exert further instability on prices in the short term, as there have been media reports of logistics issues impacting Chinese enterprises.

As discussed in the February 2020 MetalMiner Monthly Outlook report, China’s nickel ore imports surged by 30% during 2020; therefore, nickel metal supplies should still be on hand for stainless producers at this time, lessening the possibility of near-term shortages in the case of stainless steel.

Cleveland-Cliffs acquisition of AK Steel looks set to proceed

Cleveland-Cliffs advanced the date of its Q4 earnings call to Feb. 20 to accommodate a faster calendar of key dates in its acquisition of AK Steel.

Outokumpu announces review of its long products unit

Finnish stainless steel producer Outokumpu announced its deliveries of stainless steel dropped by 10% in 2019 compared to 2018.

Meanwhile, Q4 deliveries dropped by a steeper 14% when compared to Q4 2018.

The company announced it will review its long products business area, which presently incurs losses, and may undergo consolidation activity to improve profitability.

Domestic stainless steel market

Source: MetalMiner data from MetalMiner IndX(™)

Stainless 304 and 316 NAS surcharges bumped up slightly since last month’s correction.

In early February, surcharges for NAS 304 edged up to $0.61/pound. NAS 316 increased by $0.02 to $0.85/pound.

What this means for industrial buyers

Price instability beset nickel prices once more in January; therefore, industrial buying organizations need to stay on alert for shifting nickel price dynamics during H1 2020.

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Actual stainless steel prices and trends

The LME primary three-month nickel price dropped by 10.4% month over month to $12,760/mt as of Feb. 1.

India’s primary nickel price fell by almost 10% to $13.25/kilogram.

China’s primary nickel price dropped by 8.1% to $14,963/mt, while other Chinese prices generally increased this month. The biggest price gains were seen for China’s 316 and 304 CR Coil, rising by 1.9% and 1.7%, respectively, to $2,970/mt and $2,177/mt.

Korean prices also dropped by 3.4% and 6.8% for stainless steel coil 430 CR 2B and 304 CR 2B, respectively, to $1,506/mt and $2,342/mt.

The U.S. 316 and 304 Allegheny Ludlum stainless surcharges increased by 2.9% and 2.5%, respectively, to $0.88/pound and $0.64/pound.

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