LME nickel

Nickel has fallen to a 6-year low on the London Metal Exchange, as prices have broken a key support 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.

Those traders that supported the metal price from declining further have now changed their minds. This simply means that the market sentiment has changed. Selling pressure has overcome buying power and, without making any predictions, nickel is now more vulnerable to further declines.

Two factors helped to change the market sentiment:


This week, 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 this year.

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There has been a lot of talk 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.


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.

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.

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.

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.

Our analysis points to the behavior of commodities and the industrial metal industry group together making up over 60% of the specific metal price. This is the reason why we are seeing many industrial metals hovering near record lows as well.

We can see the similarities between aluminum and nickel. In theory, aluminum has strong fundamentals, too, but we see that both metals have fallen near lows after a good rally in 2014.

Indonesia’s export ban is there, but what happens to nickel prices from now will likely depend on the commodity market. The nickel price might be punished regardless of the supply constraints. Prices may continue to decline no matter what happens on the supply side.


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, 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.


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.

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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.


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 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.


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.


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.


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