nickel price

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By most accounts, nickel has had a good run this year.

Among a falling commodity market, nickel has been one of only a couple of metals products that have bucked the trend and seen strong gains. Nickel has jumped some 35% this year, largely on the back of supply-side fears.

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The Indonesian minister for mines announcement of the country’s intention to ban nickel ore exports from 2020 and falling LME stocks – maybe as a result of those supply fears, maybe in tandem – further stocked fears of tight supply.

Since 2015, LME nickel stocks have fallen from some 500,000 tons to under 100,000 tons today, without any corresponding run-up in trade or off-warrant stocks.

There seems little argument that the nickel market is in deficit.

According to the International Nickel Study Group, the global nickel supply deficit is expected to ease from 144,000 metric tons in 2018 down to 79,000 tons in 2019. The deficit is expected to ease further still, down to 47,000 tons in 2020.

The easing of the deficit comes in large part because demand is slowing.

According to a post on RecyclingInternational.com, stainless steel production in Europe during the first half of 2019 declined 4.9% compared to the first half of 2018, falling to less than 3.75 million tons. The International Stainless Steel Forum also expects total stainless steel consumption in Europe/Africa to fall 5.7% in 2019 before rebounding by a modest 0.4% in 2020.

Yet at the same time, some analysts are predicting Asian demand will grow.

Macquarie Research is quoted as saying it expects Chinese stainless steel production to rise from 26.7 million tons in 2018 to 29.5 million tons in 2019, then 30.1 million tons in 2020.

All other things being equal, that combination should have seen prices continue to rise — or, at the very least, plateau at the elevated levels reached in September. However, after reaching a peak of $18,000 per ton, prices have since fallen back to below $15,000 per ton.

Is this simply a result of investors getting cold feet faced with an ongoing trade war and fears of continued growth in China?

We wrote back in Q3 that nickel prices appeared unsustainable and, as such, we expected them to fall.

But even we didn’t think we would see them back below $15,000 quite so soon.

If it offers any indication of supply-demand, LME nickel inventory has remained fairly stable during the month of November, with deliveries and load-outs reflecting more of trade demand than significant investor behavior.

Suffice it to say, for the time being the plunge in stock levels has stopped.

Producers are making noise about expected demand, particularly from electric vehicles (EVs) – remember them, the source of unsustainable demand for copper, lithium, cobalt and, yes, nickel?

The Union Bank of Switzerland predicts demand from electric vehicles will jump from 3% to 12% of global nickel demand in just three years, not least because states and governments are mandating zero-emission targets for the automotive industry (for example, California may need 1.5 million EVs in the next five years).

Such predictions, if realized, would spur very significant nickel demand.

But we have had false dawns from EVs before.

States can mandate, but they need to put in charging infrastructure and manufacturers need to achieve technological advances that extend between charge ranges before EVs are taken up by the mainstream.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

Investors seem to agree the focus remains on the balance between ore and scrap supply on the one side and Chinese, if not Asian, stainless steel production on the other.

Ore and scrap supply seem steady; the knowns are known, at least.

The unknown is demand.

As is so often the case in metals markets, the focus remains very much on China and the health of its manufacturing sector in the year ahead.

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This morning in metals news, an upcoming MetalMiner webinar will explore the challenges manufacturers face in talent acquisition, the nickel price continues to fall after a hot summer and miner BHP released its production results for the quarter ending Sept. 30.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

Webinar to Explore Manufacturing ‘Skills Gap’

If you haven’t already done so, there’s still time to sign up for MetalMiner’s free Oct. 23 webinar, “The War For Contractor Talent: How Manufacturers Can Find the Workers They Need (and Fast).”

The webinar is free to attend, but registration is required.

MetalMiner Executive Editor Lisa Reisman will be joined by Matt Runfola, founder of the Chicago Industrial Arts and Design Center, and Brett Armstrong, director of business development at Avetta.

Nickel Price Slides

It was a hot summer for nickel, which surged from below $12,000 per ton in June to nearly $18,500 per ton in early September, according to MetalMiner IndX data.

However, the nickel price has started to come back down to earth over the last six weeks.

The three-month LME nickel price reached $16,260/mt as of Friday, down 4.07% on a month-over-month basis.

BHP Releases 3Q 2019 Results

Miner BHP released its quarterly production results for the quarter ending Sept. 30, showing copper production fell 3% from the previous quarter due to planned maintenance.

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Meanwhile, metallurgical coal and energy coal production fell 21% and 24%, respectively.

“We delivered a solid start to the 2020 financial year through ongoing strong operational performance across our portfolio,” BHP CEO Andrew Mackenzie said. “While Group production for the quarter decreased slightly due to the expected impacts of planned maintenance and natural field decline in Petroleum, guidance remains unchanged and we are on track to deliver slightly higher volumes than last financial year. The South Flank iron ore project is 50 per cent complete, with all our major projects on schedule and budget. We achieved further encouraging exploration results in Petroleum and at the Oak Dam copper prospect.”

The Stainless Monthly Metals Index (MMI) followed last month’s six-point increase with a 16-point jump this month.

Once again, the index surge came as a result of strong nickel price gains, even though a slim majority of global prices in the index declined (albeit mildly compared to nickel price increases).

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LME nickel prices increased 28.5%, based on supply disruption news. Nickel prices in China and India also reacted strongly, increasing by 25.9% and 24.1%, respectively.

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

SHFE Nickel Prices Surged

Source: MetalMiner analysis of FastMarkets

The Indonesia nickel ore export ban will now take effect two years earlier than planned, on Jan. 1, 2020. SHFE prices surged just prior to, and during the day or so around, the actual approval of the ban date by the Indonesian government.

Higher Nickel Prices Look Set to Stick for the Near Term

Opinions appear mixed as to whether prices will drop back down anytime soon, with some analysts foreseeing further price increases.

Indonesia produced around 26% of global mine supply last year, according to the International Nickel Study Group.

It is possible ramped-up production of nickel pig iron in Indonesia will stave off further price increases from supply shortages. According to Reuters, large mining companies reportedly welcomed the ban and plan to increase smelting output.

Also, higher ingot prices higher, incentivizes mine production; as such, increases could also come from other sources.

According to a recent Reuters report, Dante Bravo, president of the Philippine Nickel Industry Association indicated mine production looks set to ramp up in 2020, but constraints, such as government-imposed mining curbs, will limit growth. Bravo added mining volume most likely peaked with 2014’s record-setting high of 50 million tons.

The Philippines produced 11.31 million tons of nickel during the first half of 2019, up by 3% compared with the first half of 2018, Reuters reported.

Domestic Stainless Steel Market

Source: MetalMiner data from MetalMiner IndX(™)

Stainless 304 and 316 NAS surcharges increased in August due to sizable nickel price increases. Next month’s MMI looks set to show a greater impact from surcharges than they showed in August.

What This Means for Industrial Buyers

MetalMiner’s stainless steel price index hit near a five-year high, rising to a value not seen since November 2014’s value of 92. As indicated last month, prices appear speculatively high; premium prices also surged.

Therefore, industrial buyers need to stay alert for the right opportunity to buy.

Buying organizations interested in tracking industrial metals prices with greater ease will want to request a demo of the MetalMiner Insights platform.

Buying organizations seeking more insight into longer-term steel price trends should read MetalMiner’s Annual Metal Buying Outlook.

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Actual Stainless Steel Prices and Trends

Once again, nickel prices registered double-digit increases for the monthly index reading.

The LME primary three-month nickel price increased by 28.5% to $18,475/mt. China’s primary nickel price increased by 25.9% to $20,601/mt. India’s primary nickel price increased by 24.1% to $17.99/kilogram.

The U.S. 316 and 304 Allegheny Ludlum stainless surcharges increased by 14.1% and 16.6%, respectively, to $1.00/pound and $0.69/pound.

More than half of the prices in the index dropped, albeit mildly compared with the price increases.

Chinese Ferro Alloys FeMo lumps dropped by 4.7% this month, while FeCr lumps dropped by 4%.

Chinese 316 and 304 stainless steel scrap prices both dropped 4%, down to $1,827/mt and $1,401/mt, respectively.

Chinese 304 CR stainless steel coil increased 4.4% to $2,259/mt, while 316 CR coil dropped by 0.8% to $3,081/mt.

Korean prices for 430 CR 2B stainless steel coil and 304 CR 2B stainless coil both decreased by 2.2%, down to $1,195/mt and $2,101/mt, respectively.

On the heels of the doldrums of December, metals prices have made gains through the first two months in 2019.

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February was an especially strong month for a number of metals.

However, markets are especially sensitive to any snippets of news coming out of the ongoing U.S.-China trade talks. President Donald Trump recently delayed the March 1 deadline for a planned tariff rate increase as talks continued.

Whether the two countries reach a meaningful deal anytime soon remains to be seen; as of now, however, metals prices are enjoying a bit of upward momentum.

Read more

With the January 2019 Monthly Metals Index (MMI) report, we can close the book on 2018 and what was a wild year in the world of metals and metals price movements.

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It was a book that closed with a pessimistic chapter for metals (and commodities in general), with many posting price declines as markets feel the effect of simmering trade tensions between the U.S. and China.

In our latest MMI report, you can read about all of the latest news and trends in our 10 metals subindexes: Automotive, Construction, Rare Earths, Renewables, Aluminum, Copper, Stainless Steel, Raw Steels, GOES and Global Precious.

A few highlights from this month’s round of reports:

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Read about all of the above and much more by downloading the January 2019 MMI Report below:

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This morning in metals news, the nickel price has plunged to its lowest level in 11 months, Canadian Prime Minister Justin Trudeau spoke with President Donald Trump over the weekend regarding the U.S.’s steel and aluminum tariffs, and two train derailments appear to have had little impact on Australia’s iron ore sector.

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Nickel Falls to 11-Month Low

The nickel price dropped to an 11-month low Monday, Reuters reported, based on worries of slowing Chinese steel demand.

LME nickel fell 1%, while the most-traded Shanghai nickel contract fell 2.4%, according to the report.

MetalMiner’s Take: While nickel falls to an 11-month low, the MetalMiner analyst team has a close eye on several key metals market price drivers.

Oil prices have begun to drop but remain above the $58/barrel level, which serves as the long-term bear/bull threshold. As oil prices currently remain above that level, the long-term trend remains bullish.

The other key price driver to watch is the U.S. dollar, which has increased. However, it remains below the key resistance level MetalMiner has set as the level at which the markets turn from bullish to bearish.

MetalMiner readers will note the dollar and commodities trade inversely, so a higher dollar results in lower commodity prices.

Metal-buying organizations will want to pay careful attention now to oil prices, the U.S. dollar and China demand. A change in any two of these three could signal a market shift.

Trudeau, Trump Talk Tariffs

As world leaders gathered in France this weekend for the 100th anniversary of Armistice Day, Canadian Prime Minister Justin Trudeau and President Donald Trump exchanged words over the weekend regarding the U.S.’s steel and aluminum tariffs, Reuters reported.

Canada’s temporary exemption to the U.S.’s Section 232 steel and aluminum tariffs expired June 1.

According to the report, Trudeau said he hoped to reach a resolution on the issue before this year’s G20 Summit, which kicks off Nov. 30 in Buenos Aires.

Australian Iron Ore

A pair of recent train derailments have had minimal impact on Australia’s substantial iron ore sector, according to a Bloomberg report.

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According to the report, iron ore futures on the Dalian Commodity Exchange fell 1% Monday.

It was another busy month in the world of metals.

Then again, these days quiet months in metals or in trade, generally, are few and far between.

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Trade tensions continued to rise, as $34 billion in tariffs on Chinese goods went into effect (China responded in kind), and an additional $16 billion in tariffs are under review. This week, President Donald Trump announced the intention to impose an additional $200 billion in tariffs on China, ratcheting up the stakes even further.

Meanwhile, a Section 232 investigation focusing on imports of automobiles and automotive components is unfolding. More than 2,300 public comments were submitted as part of the U.S. Department of Commerce’s review process, and public hearings are scheduled for next week.

Meanwhile, in metals markets, most base metals were down last month, with steel being the exception.

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A few highlights from this month’s round of Monthly Metal Index (MMI) reports:

  • Since peaking at $7,316/mt in June, the LME copper price dropped 12%.
  • The subindex for grain-oriented electrical steel was the only MMI to post an increase on the month.
  • The U.S. silver price hit its lowest level since January 2017, while U.S. gold bullion dropped to a one-year low.
  • Aluminum prices were also part of the general downtrend, as prices continued to move away from this year’s April peak (after Russian companies and their owners, including aluminum giant Rusal, were slapped with sanctions by the U.S.).

Read about all of the above and much more by downloading the July MMI report below.

The Stainless Steel Monthly Metals Index (MMI) skyrocketed this month, increasing by seven points. The current reading stands at 84.

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The index inched higher driven by the increase in stainless steel surcharges and a sharp increase in LME nickel prices in May. Other related metals in the stainless steel basket also increased.

LME Nickel

Nickel price momentum seems to have recovered again.

LME nickel prices increased at a quicker pace in May. The increases continued through the beginning of June, driving prices to 2014 highs. 

Source: MetalMiner analysis of FastMarkets

LME nickel prices keep moving away from 2017 lows.

MetalMiner previously recommended buying some volume forward. Given the current uncertainty in the steel and stainless industries, nickel prices remain supported for the short term.

In addition, a fundamental tightness in the nickel market has added support to the latest nickel price increases.

Domestic Stainless Steel Market

Following the recovery in stainless steel momentum, domestic stainless steel surcharges increased again this month. The 316/316L-coil NAS surcharge reached $1.02/pound.

Source: MetalMiner data from MetalMiner IndX(™)

The pace of stainless steel surcharge increases, however, appears to have slowed again this month. Yet stainless steel surcharges remain in a clear uptrend and rest well above 2015-2017 lows.

What This Means for Industrial Buyers

Stainless steel momentum appears stronger this month, as steel prices are skyrocketing. As both steel and nickel remain in a bull market, buying organizations may want to follow the market closely for opportunities to buy on the dips.

To understand how to adapt buying strategies to your specific needs on a monthly basis, take a free trial of our Monthly Outlook now.

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Actual Stainless Steel Prices and Trends

Chinese 304 stainless steel coil prices increased again this month by 2.02%, while Chinese 316 stainless steel coil prices rose further by 6.61%. Chinese Ferrochrome prices increased this month by 2.9%, to $1,990/mt.

Nickel prices increased by 10.5% to $15,210/mt.

In May, the Stainless Steel Monthly Metals Index (MMI) once again inched one point higher. The current reading stands at 77 points.

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The subindex inched higher driven by increasing LME nickel prices. Meanwhile, other related metals in the stainless steel basket traded flat. Chinese ferrochrome alloy decreased for the second consecutive month, this month by 3.2%.

LME Nickel

In April, LME nickel prices increased sharply, following some of the other base metals uptrends (such as aluminum and copper).

LME nickel prices went up to $16,685/mt and then corrected. LME nickel prices in May remain in an uptrend, with current prices around $13,900/mt.

Source: MetalMiner analysis of FastMarkets

LME nickel prices remain in a long-term uptrend that started back in June 2017, when LME nickel prices hovered around $8,900/mt.

However, nickel price momentum seems slower now than it was back in 2017.

Since February, LME nickel prices have traded more sideways. Buying trading volume still supports the uptrend, which may result in increasing nickel prices in the coming months.

Domestic Stainless Steel Market

Following the recovery in stainless steel price momentum, domestic stainless steel surcharges increased again this month. The 316/316L-coil NAS surcharge reached $1.01/pound, while the 304/304L-coil NAS surcharge increased to $0.71/pound.

Source: MetalMiner data from MetalMiner IndX(™)

After last month’s sideways trend for NAS stainless steel surcharges, the uptrend has started again. The 316/316L-coil NAS surcharge is currently moving toward the January 2013 peak of $1.12/pound. The surcharge has breached previous high peaks already.

China Stainless Steel Market

An abundance of stainless steel in China came as a result of new production in Indonesia. The Chinese-owned stainless company Tsingshan started production last August in Indonesia, with an annual capacity of around 3 million tons by the end of 2018. This annual capacity equates to 6% of last year’s global stainless steel capacity.

Due to this increased production, China became a net importer of hot-rolled stainless coil already in December 2017 for the first time in more than seven years, according to the International Steel Statistics Bureau. Chinese stainless steel stocks have risen, while Chinese stainless steel prices have not. In fact, Chinese stainless steel price currently trade sideways.

The current divergence between increasing LME nickel prices and Chinese stainless steel prices, plus increasing stainless steel stocks, may drive some mills to cut production. 

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What This Means for Industrial Buyers

Stainless steel price momentum appears to be strong this month, as stainless steel surcharges increased sharply.

With nickel in a bull market, buying organizations may want to follow the market closely for opportunities to buy on the dips. Hedging nickel may result in potential savings opportunities for buying organizations.

To understand how to adapt buying strategies to your specific needs on a monthly basis, take a free trial of our Monthly Outlook now.

As my colleague Fouad Egbaria wrote last week, the U.S. administration’s relaxation of the timescale for implementation of sanctions against Rusal has had the effect of taking the panic out of the market. As a result, prices have fallen for several days, not just for aluminum but for other metals that the market feared could face the same threat — most notably nickel, in which Russian oligarch Oleg Deripaska has an interest.

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But the vagaries of Washington policy aside, the underlying fundamentals for the nickel market remain firm.

Global Nickel Production and Usage Projected to Grow This Year

Reuters reports that according to the International Nickel Study Group, world stainless steel melting production rose by 5.8% last year, while projecting that global nickel production and usage is expected to rise to 2.344 million tons (MT) in 2018.

In terms of tonnage, world nickel production is expected to grow from 2.07 MT last year to 2.22 MT this year, while usage is expected to increase from 2.19 MT in 2017 to 2.34 MT in 2018.

As a perspective on fundamentals reasserts itself, the nickel price has recovered, rising back about $14,000 per ton. Demand has remained robust among stainless producers, with production forecast to rise 4% this year to over 52 million tons, while fears remain around supply.

Philippines Industry Aims to Navigate Government Land Regulations

The Philippines was top supplier to China last year, but the government of President Rodrigo Duterte is not letting up on its efforts to curb environmental damage from the extraction industry and threats remain of nickel mining being curtailed.

Nickel Asia, the Philippines’ top nickel ore producer and operator of the only two nickel smelters in the country, is quoted by Reuters as saying it intends to ship 20 million tons of ore this year — up 17% on last year.

But the government is limiting the amount of land miners can develop at any one time in a spur to rehabilitate old workings.

The limits are highly restrictive, amounting to only 100 hectares for mines producing 9 million tons or more, or 162 hectares if the project has a processing plant on site. The biggest of Nickel Asia’s mines covers 5,000 hectares and even the smallest covers 700, so it will be interesting to see if the firm manages the expansion in output it is projecting.

Indonesian Output on the Rise

Output in Indonesia is recovering following a lifting of the 2014 ban. The country has reasserted itself as the No. 1 supplier to China in the first half of this year.

The ban was lifted partly as the country looked to make up for the loss of revenue when exports collapsed and partly as firms invest in the downstream processing the ban was intended to force through.

Further increases in output, however, are limited, and investment in new reserves has been poor, while the nickel price was lower over recent years so the ability of the market to respond to predicted increases in demand from electric car and battery makers is in question.

The Outlook

We could see a growing divergence in nickel prices with standard nickel stainless melting grades remaining firm in the short to medium term, but battery Grade A, high-purity nickel premiums rising strongly if demand materializes as expected.

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Supplies of such high-purity nickel are limited, with only major producers like BHP Billiton, Norilsk Nickel, Vale and Sumitomo able to supply.