Stainless MMI: Nickel price drops on Tsingshan supply news

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The Stainless Monthly Metals Index (MMI) rose by 4.3% for this month’s reading, as news of a supply deal by China’s Tsingshan Holding Group helped push the nickel price downward.

March 2021 Stainless MMI chart

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Nickel price falls on Tsingshan supply deal news

The nickel price, like most other base metals, surged through the first two-thirds of February.

The LME nickel price reached as high as $19,722 per metric ton as of Feb. 21.

From there, however, the price dropped, particularly after news of supply deals by China’s Tsingshan Holding Group.

Tsingshan will provide a total of 100,000 metric tons of nickel matte to Huayou Cobalt and CNGR Advanced Material, Reuters reported.

“Nickel’s narrative has largely been predicated on a shortage of battery-grade metal driven by EV demand,” MetalMiner’s Stuart Burns explained earlier this month.

“However, Tsingshan’s supply contract and capacity announcements suggest there will be sufficient supply. As a result, the nickel market reflected a sharp rethink of the deficit view.

“Demand undoubtedly remains robust for nickel. Its medium- to longer-term outlook remains positive on the back of stainless and battery demand.”

A price drop at some point was expected.

“It’s expected that the market would see some price corrections,” MetalMiner CEO Lisa Reisman explained. “Now we are looking closely to see if prices break support levels or hold. Most of the base metals appear to have held onto their support, with the exception of nickel.

“However, the falling nickel price will not result in more availability or shorter lead times. In fact, more fabricators and OEMs have started to pursue import options to help alleviate supply chain hiccups.”

Bullwhip effect

Supply chain slowdowns can be seen in myriad industries and products, from cabinets to metals to semiconductors.

The bullwhip effect — that is, when sharp upticks in demand lead to volatility across the supply chain — is real.

“Not only do we see companies struggle to purchase material for ‘normal demand,’ but we see growing demand in certain sectors where demand exceeds supply,” Reisman explains. 

Meanwhile, on the supply side, manufacturers have not opened up dormant capacity.

“For suppliers, particularly on the steel side, not all available capacity has been brought on stream,” Reisman added. “So what you have is production numbers that have hit full capacity but an unwillingness of producers to add additional lines and open up dormant capacity.” 

NAS increases fuel surcharge

Last month, we noted North American Stainless (NAS) and Outokumpu increased their base prices.

This month, NAS announced a fuel surcharge increase. On Feb. 23, NAS announced it will increase the fuel surcharge to 24% for stainless flat and long products.

“The surcharge rate is considered the maximum level for March and will be reviewed monthly,” NAS said.

Stainless steel imports pick up

The U.S. Steel Import Monitor (SIMA) indicates stainless steel imports are on the rise

During January, the U.S. imported 59,736 metric tons of stainless steel, up from 51,236 metric tons. 

Meanwhile, license data for February shows 113,400 metric tons.

This trend coincides with recent base and surcharge increases, as demand remains high and supply is constrained in the U.S. domestic market, Reisman explained. 

Actual metals prices and trends

The 304 Allegheny Ludlum surcharge rose by 4.5% month over month to $0.92 per pound. The 316 surcharge rose by 6.8% to $1.25 per pound.

The Chinese 316 cold rolled coil price ticked up 3.3% to $3,629 per metric ton. Meanwhile, 304 cold rolled coil rose by 3.9% to $3,640 per metric ton.

LME three-month nickel jumped by 5.0% to $18,653 per metric ton. Chinese primary nickel rose by 4.6% to $21,725 per metric ton.

Indian primary nickel jumped by 3.9% to $18.47 per kilogram.

Find more insight on MetalMiner’s LinkedIn.

Comment (1)

  1. Brian Reynolds says:

    Chrome nickel what would it be valued as

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