LME nickel

Nickel has fallen to a 6-year low on the London Metal Exchange. Prices have failed to find support at a key level.

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The monthly Stainless MMI® registered a value of 72 in April, a decrease of 7.7% from 78 in March. Stainless steel prices are falling along with their key alloying metal.

Stainless_Chart_April-2015_FNL

What Do We Mean by Key support Levels?

It’s Pretty simple. “Support,” in this usage, is a price level where demand (buying power) is strong enough to prevent the price from declining further. During 2013-2014 nickel prices found support several times at $13,300 per metric ton, as traders found that level to be a good entry point to buy the metal. Last week, prices fell as low as $12,310 per mt.

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This week on the London Metal Exchange, the 3-month LME nickel price fell to its lowest level since 2009. It’s certainly not the first industrial metal to hit a 6-year low in this bearish year for base metals.

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There has been a lot of talk recently about nickel’s supply side. Indonesian authorities have not changed their minds about refusing to export raw ore and the ensuing ban on exports of nickel ore to China continues. There is no flow of material between the two countries.

NPI Demand Drops

However, it’s important to remember that China’s nickel pig-iron producers had built up significant quantities of stocks prior to the January 2014 ban, compensating for the supply decrease. At 2 million metric tons, imports of Philippine ore this year are slightly higher than last year but are still nowhere near enough to offset the loss of Indonesian supply.

Chinese demand is weak and global demand, overall, is weak as well. Stainless demand is suffering from the same macroeconomic pressures as other industrial commodities. You don’t need to be an economist to see that. Just by looking at the performance of other base metals, it is clear that a bear looms.

Nickel making 6-year low (3m LME price since 2010)

Nickel’s 3-month LME price has hit a 6-year low. Source: MetalMiner/LME

Nickel is falling to new lows in heavy trading volume. Nickel’s LME fall also coincides with the launch, yesterday, of the Shanghai Futures Exchange nickel contract. Some analysts say the new contract prompted a surge in LME volumes.

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The monthly Stainless MMI® continued its long descent from Mount Kilimanjaro and registered a value of 78 in March, a decrease of 3.7% from 81 in February. The nickel price drop has now lasted 10 months since its meteoric early 2014 rise.

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Nickel is hovering around its lows of 2014. We believe that these lows ($13,400 per ton) are an important level to watch.

Stainless_Chart_March-2015_FNL

Most analysts agree that nickel’s fundamentals remain positive, at least on the supply side. The Indonesian authorities haven’t changed their minds and the ban on exports of nickel ore to China there hasn’t changed. The flows of material between the two countries have disappeared.

Philippine NPI Supply Surge

A surge in nickel ore supply from the Philippines and the fact that China’s nickel pig-iron producers have built up significant quantities of stocks prior to the January 2014 ban compensated for the supply decrease. Indeed, the ore ban in Indonesia led to a 37% increase in nickel mining in the Philippines last year. One Filipino nickel miner even announced an IPO. It seems as if it’s just a matter of time until we see some impact on NPI production rates.

Aluminum vs Nickel since 2010

Aluminum vs. Nickel since 2010. Source: MetalMiner.

Although most analysts are focusing on the supply side, we believe that the key for the nickel price is directly related to nickel’s demand expectations. Those expectations are low at this point, and this is weighing down nickel prices.

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After the fallout from the Chinese documentary “Under the Dome,” many nickel pig-iron producers are under pressure to clean up their act or shut down.

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Could nickel prices get a boost from the most recent closures at NPI producers in Linyi City, Shandong Province, China?

“The closures will not boost nickel price,” an analyst told CS.com.cn, as cited in Shanghai Metal Market, citing high LME nickel inventories, tumbling nickel prices, and a strong dollar.

Supply of low-grade NPI is also sufficient, the analyst told the website.

Linyi is a major producing region of low-grade NPI in China, with output accounting for 75% of China’s total.

The Indian nickel cash price closed up Thursday, March 5 at INR 884.90 ($14.20) per kilogram, halting two days of weakening prices with a 2.6% shift. Following a two-day drop, the nickel spot price increased by 1.8% on the LME to $13,825 per metric ton. Following a 1.5% rise yesterday, the nickel 3-month price closed on the LME at $13,875 per metric ton.

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Chinese stainless steel closed mixed yesterday. The price of Chinese ferro-chrome saw little movement at CNY 10,950 ($1,746) per metric ton. The price of Chinese ferro-moly saw essentially no change for the fifth day in a row, remaining around CNY 82,000 ($13,071) per metric ton.

The price of Chinese primary nickel rose 2.0% to CNY 104,500 ($16,658) per metric ton after a two-day drop. For the fifth day in a row, the Allegheny Ludlum 316 stainless surcharge remained essentially flat at $0.87 per pound. The price of Chinese 316 stainless coil was unchanged at CNY 23,700 ($3,778) per metric ton. The price of Chinese 304 stainless coil remained essentially flat at CNY 16,700 ($2,662) per metric ton. For the fifth consecutive day, the price of Chinese 316 stainless steel scrap held flat at CNY 13,050 ($2,080) per metric ton.

Xinjiang Xinxin Mining Industry, China’s second-largest producer of nickel used in stainless steel production, told the South China Morning Post it expects its fourth quarter results will show a profit and a 300% jump in revenue mostly from increased nickel volume.

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The improvement was due to higher nickel prices, sales volume and lower production costs in 2014, while revenue was also boosted by the commissioning of a copper project in the middle of last year, the Xinjiang-based firm said in a filing to Hong Kong’s stock exchange.

In 2013, it had revenue of 844.9 million yuan and a net loss of 58.5 million yuan. Revenue was 1.53 billion yuan in 2012.

The firm said it had a “significant increase” in the sales volume of its mainstay product, nickel cathode, from 4,182 tonnes in 2013. The product accounted for 51.2 per cent of total revenue in that year, compared to 46.5 per cent contributed by copper cathode.

The Indian nickel cash price experienced the biggest price decline of the day, dropping 2.1% to close at INR 862.70 ($13.96) per kilogram on Wednesday, March 4. On the LME, the nickel spot price fell 2.1% to $13,580 per metric ton. The 3-month price of nickel weakened by 2.0% on the LME, settling at $13,675 per metric ton.

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Chinese stainless steel prices were mixed for the day. The price of Chinese ferro-chrome saw essentially no change for the fifth day in a row, remaining around CNY 10,950 ($1,745) per metric ton. The price of Chinese ferro-moly continues hovering around CNY 82,000 ($13,069) per metric ton for the fifth day in a row.

The price of Chinese primary nickel saw a 1.7% decline to CNY 102,500 ($16,336) per metric ton. For the fifth day in a row, the Allegheny Ludlum 316 stainless surcharge remained essentially flat at $0.87 per pound. The price of Chinese 316 stainless coil was unchanged at CNY 23,700 ($3,777) per metric ton. The price of Chinese 304 stainless coil held steady at CNY 16,700 ($2,662) per metric ton. For the fifth consecutive day, the price of Chinese 316 stainless steel scrap held flat at CNY 13,050 ($2,080) per metric ton.

London nickel is hovering around a 14-month low on Wednesday, as a relentless rise in exchange-held nickel stocks overshadowed expectations of a shortage of nickel ore towards the end of the year.

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China’s stocks of nickel ore, used to make stainless steel, have dwindled following an export ban by Indonesia at the start of last year, raising expectations producers will have to turn to nickel instead.

LME prices jumped more than 50% early last year, but have since slumped back to trading levels in place before the ban.

“Clearly the bulls have capitulated,” strategist Daniel Hynes of ANZ in Sydney told Reuters, adding that there appeared to be no sign of nickel ore being replaced with nickel in China.

LME stocks have surged by 30% in the past six months alone, hitting a string of record highs, to around 430,000 tons.

The spot price of nickel saw the biggest decline of the day, dropping 1.2% on the LME to close at $13,875 per metric ton on Tuesday, March 3. The nickel 3-month price weakened by 1.0% on the LME, settling at $13,950 per metric ton. The Indian nickel cash price declined 1.0% to INR 881.50 ($14.24) per kilogram.

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Chinese stainless steel prices were mixed for the day. The price of Chinese ferro-chrome saw little movement at CNY 10,950 ($1,745) per metric ton. For the fifth consecutive day, the price of Chinese ferro-moly held flat at CNY 82,000 ($13,065) per metric ton.

The price of Chinese primary nickel fell 1.0% to CNY 104,300 ($16,618) per metric ton. The Allegheny Ludlum 316 stainless surcharge saw little movement on Tuesday at $0.87 per pound. The price of Chinese 316 stainless coil continues hovering around CNY 23,700 ($3,776) per metric ton for the fifth day in a row. For the fifth day in a row, the price of Chinese 304 stainless coil remained essentially flat at CNY 16,700 ($2,661) per metric ton. The price of Chinese 316 stainless steel scrap held steady at CNY 13,050 ($2,079) per metric ton.

The government of India, this weekend, proposed a hike in the peak rate of import duties on steel products from 10 to 15%. The move, if approved, will likely stem the flood of cheap imports from Russia and China.

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While this was part of recommendations made by finance minister Arun Jaitley in his budget speech, the timing of the decision will depend on the government notification after the budget is approved by Parliament so there is no immediate relief in sight for stainless steel producers who have been hit particularly hard by the cheap imports.

The cash price of primary Indian nickel saw the biggest upwards shift for the day, rising 1.2% to close at INR 897.30 ($14.53) per kilogram on Friday, February 27. At $14,395, the spot price of nickel finished the market day on the LME up 0.6% per metric ton. On the LME, the 3-month price of nickel gained 0.3% to finish at $14,430 per metric ton.

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Chinese stainless steel prices were mixed for the day. The price of Chinese ferro-chrome saw little movement at CNY 10,950 ($1,750) per metric ton. For the fifth consecutive day, the price of Chinese ferro-moly held flat at CNY 82,000 ($13,107) per metric ton.

The price of Chinese primary nickel fell 0.7% last Friday to CNY 106,100 ($16,959) per metric ton. The Allegheny Ludlum 316 stainless surcharge remained essentially flat at $0.87 per pound. The price of Chinese 316 stainless coil remained essentially flat at CNY 23,700 ($3,788) per metric ton. The price of Chinese 304 stainless coil saw essentially no change for the fifth day in a row, remaining around CNY 16,700 ($2,669) per metric ton. The price of Chinese 316 stainless steel scrap held steady at CNY 13,050 ($2,086) per metric ton.

Indian stainless steel manufacturers got some relief this week as the government proposed increasing import duties on Chinese and Russian importers.

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Surcharges fell in the US as well.

The biggest mover this week was the Allegheny Ludlum 316 stainless surcharge with a 7.9% fall on the weekly Stainless MMI® to close the week at $0.87 per pound. The Allegheny Ludlum 304 stainless surcharge fell to $0.65 per pound after a 7.6% decrease from the previous week. Closing at KRW 4.2 million ($3,881) per metric ton, Korean 304 stainless coil remained unchanged for the week. Korean 304 stainless coil traded sideways last week, hovering around KRW 4.2 million ($3,881) per metric ton.

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Chinese stainless steel prices were mixed for the week. Prices for Chinese ferro-chrome remained constant, closing the week at CNY 10,950 ($1,750) per metric ton. At CNY 82,000 ($13,107) per metric ton, the week finished with no movement for Chinese ferro-moly.

The price of Chinese primary nickel dropped 0.7% this week, closing out the third consecutive week of falling prices at CNY 106,100 ($16,959) per metric ton. At CNY 9,450 ($1,510) per metric ton, the price of Chinese 304 stainless steel scrap did not change since the previous week. Chinese 316 stainless steel scrap traded sideways last week, hovering around CNY 13,050 ($2,086) per metric ton. Chinese 304 stainless coil prices held steady from the previous week at CNY 16,700 ($2,669) per metric ton. Following a steady week, prices for Chinese 316 stainless coil closed flat at CNY 23,700 ($3,788) per metric ton.

The cash price of primary Indian nickel rose 3.7% to INR 897.30 ($14.53) per kilogram after falling 6.4% during the previous week. The nickel spot price rose 3.4% on the LME to $14,395 per metric ton after falling 5.5% during the previous week. The 3-month price of nickel rose 3.2% on the LME to $14,430 per metric ton after falling 5.2% during the previous week.

The Stainless MMI® collects and weights 14 global stainless steel and raw material price points to provide a unique view into stainless steel price trends. For more information on the Stainless MMI®, how it’s calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.

Philippine nickel mining production grew 37% in the first nine months of 2014, the island nation’s Mines and Geosciences Bureau said Monday.

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Indonesia’s ban on raw ores was a boon to Philippine miners who filled the gap left behind for Chinese stainless steel manufacturers. MGB director Leo Jasareno told the Manila Standard Today that the value of metallic production in the nine-month period amounted to 102.47 billion Philippine Pesos, up from P74.82 billion recorded in the same period in 2013.

The 3-month price of nickel saw a 0.6% increase on Thursday, February 26, reaching $14,390 per metric ton on the LME and making it the biggest mover for the day. The cash price of primary Indian nickel saw a 0.5% decline to INR 886.50 ($14.32) per kilogram. On the LME, the nickel spot price increased 0.4% to $14,310 per metric ton.

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Chinese stainless steel prices were flat for the day. The price of Chinese ferro-chrome continues hovering around CNY 10,950 ($1,750) per metric ton for the fifth day in a row. For the fifth consecutive day, the price of Chinese ferro-moly held flat at CNY 82,000 ($13,101) per metric ton.

The Allegheny Ludlum 316 stainless surcharge held steady around $0.87 per pound. For the fifth day in a row, the price of Chinese 316 stainless coil remained essentially flat at CNY 23,700 ($3,787) per metric ton. The price of Chinese 304 stainless coil held steady at CNY 16,700 ($2,668) per metric ton. The price of Chinese 316 stainless steel scrap remained essentially flat at CNY 13,050 ($2,085) per metric ton. The price of Chinese 304 stainless steel scrap continues hovering around CNY 9,450 ($1,510) per metric ton for the fifth day in a row.

European stainless steel producers Aperam and Acciai Speciali Terni followed Finland’s Outokumpu in raising alloy stainless surcharges.

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The increases effectively reversed the drop in surcharge levels in early February.

Luxembourg-based Aperam set its alloy adjustment factor for type 304 (4301) flat products at €1,283/metric ton ($1,456/mt) for March, up €45 from February, while Italy’s Terni raised its 304 surcharge €34 to €1,322/mt.

The day’s biggest mover broke away from a static phase with a 7.9% drop on Wednesday, February 25. After three changeless days, the Allegheny Ludlum 316 stainless surcharge closed at $0.87 per pound. The price of Chinese primary nickel saw little movement at CNY 106,900 ($17,109) per metric ton. The price of Chinese 304 stainless steel scrap remained essentially flat at CNY 9,450 ($1,512) per metric ton. For the fifth day in a row, the price of Chinese 316 stainless steel scrap remained essentially flat at CNY 13,050 ($2,089) per metric ton. The price of Chinese 304 stainless coil was unchanged at CNY 16,700 ($2,673) per metric ton.

The price of Chinese ferro-chrome continues hovering around CNY 10,950 ($1,753) per metric ton for the fifth day in a row. For the fifth consecutive day, the price of Chinese ferro-moly held flat at CNY 82,000 ($13,124) per metric ton.

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At $14,250, the nickel spot price finished the market day on the LME up 2.4% per metric ton. On the LME, the nickel 3-month price inched up 2.3% to $14,300 per metric ton. The Indian nickel cash price increased 1.8% to INR 891.30 ($14.35) per kilogram.