stainless steel price

On Thursday, the Philippines ordered the closure of 21 mines, and seven others could be suspended. The country previously suspended nickel mines last year. The nickel mines recently ordered to shut down account for about 50% of the country’s annual output.

Nickel Prices Rebound

Nickel Rebounds on news of the Philippines’ shutdowns. Source: MetalMiner analysis of fastmarkets.com data.

Nickel rose sharply on the news. Over the last few weeks, nickel prices were struggling to make headway as investors feared that the easing of the Indonesian export ban would bring more ore supply into global markets.

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Now we have two factors, Indonesia’s easing of its export ban and the Philippines’ shutdowns, that could drive prices in opposite directions. However, as we explained recently, the mining shutdowns in the Philippines are likely to be a greater driver of prices.

According to a Reuters report, the new rules would allow Indonesia to export up to 5.2 million metric tons of nickel ore a year. Meanwhile, the Philippines produced 32 mmt of nickel ore in 2015. Therefore, while Indonesia could potentially add 5.2 mmt to the global markets, 16 mmt of nickel production in the Philippines is at risk.

The Wind Is Blowing On Nickel’s Back

If we narrow our view to the supply/demand fundamentals of the nickel industry, the picture looks bullish, but rather complex. However, we need to widen our view to the whole industrial metals spectrum, and this one looks quite bullish. Industrial metals continue to rise on robust demand and shrinking supply.

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Investors are pouring money into industrial metals and while this doesn’t change, we expect nickel prices to at least remain supported, most likely heading higher over the coming months.

Or at least if that wasn’t the intent, it’s likely how the smelters feel.

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In an about face on Indonesia’s 2014 export ban across a range of minerals, Energy and Mineral Resources Minister Ignasius Jonan said this week that local miners might be allowed to export up to 5.2 million tons of low-grade nickel ore a year, partially reversing the ban intended to force buyers to set up value-add refining facilities in Indonesia.

The export ban has been relatively successful. Export volumes, of course, plummeted from about 60 million metric tons before the 2014 ban was enforced but new refineries have been set up and refined volumes of value-add material have increased. Read more

Our Stainless MMI rose 3.3% in November as nickel prices continue to look strong.

Stainless_Chart_December-2016_FNL

The Philippines’ output of nickel ore fell 16% in the third quarter from a year earlier, as a result of several mine suspensions due to environmental violations. The country has already stopped work at 10 of its 41 mines, eight of which are nickel mines. 20 More mines, 14 of which mine nickel, could see their licenses suspended.

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Environment and Natural Resources Secretary Regina Lopez recently said that there will definitely be more mine suspensions when the country releases rulings on those 20 mines, possibly within the next few days. Read more

Allegheny Technologies, Inc. shares tumbled 15% Tuesday after the Pittsburgh-based specialty metals producer reported a larger than expected third quarter loss and missed analyst revenue estimates as well.

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The company lost $530.8 million, or $4.95 per share, vs. a loss of $144.6 million, or $1.35 per share, in the year-ago quarter. Sales fell 7% to $770.5 million. Analysts had expected the company to report an adjusted loss of 10 cents per share and revenue of $822 million.

ATI also announced the permanent closing of the idled Midland stainless steel melt shop and finishing operation in Beaver County, Pa.

It also permanently closed its Bagdad plant in Gilpin, Pa., whichemployed about 225 people. It produced grain-oriented electrical steel prior to the start of the six-month lockout of union workers in August 2015. Midland employed around 250 workers.

“The decision helps provide clarity to some of the people who had hoped that there would be a restart,” ATI spokesman Dan Greenfield said.

In December, the company announced it was mothballing both facilities with the possibility that they would reopen if market conditions for those products improved.

Free Download: The October 2016 MMI Report

Richard Harshman, ATI’s chief executive officer, said that has not happened. He announced the move as part of the company’s third-quarter earnings statement.

Our Stainless MMI rose 4% in September. The complexity and uncertainty of the supply equation is giving support to nickel prices, so far, this year.

Philippines To Close More Mines

Philippine nickel production is down 24% for the first seven months of this year. The Philippines had already suspended eight nickel mines in previous months and more suspensions were expected. On September 27th, the government announced that 20 more of its mines would be suspended for environmental violations.

Stainless_Chart_October-2016_FNL

The suspended mines and those at risk represent nearly 60% of output in the Philippines, the world’s largest producer of nickel ore and top supplier to top buyer China. China’s imports of nickel ore and concentrates from the Philippines fell 21.3% in the first eight months of year to 17.99 million metric tons.The uncertainty surrounding Philippines’s output is the bullish side of nickel’s story.

Indonesia in Play

Meanwhile, it looks like Indonesian production is now in recovery mode. Indonesian supply rose 30% in the first seven months this year. Ferronickel is an intermediate stage product between ore and refined metal, and Indonesian exports of ferronickel to China have surged this year.

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At the same time as refined nickel production in Indonesia is rising, as the popualce wanted, Indonesia is also considering whether to resume raw nickel ore exports. The decision is expected within weeks. Nickel smelters now fear the rule changes as they could weaken nickel prices, especially those companies that make semi-finished and refined metal.

Price Outlook

It’s worth noting that while nickel has performed strongly this year, it’s still well below the levels five years ago when the metal peaked near $29,000/mt. It seems that prices have room on the outside but more tightness is needed in nickel markets.

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Indonesia relaxing the 2014 export ban could add pressure to nickel prices. On the other hand, prices might continue to get a boost while The Philippines keeps on punishing mines that don’t meet environmental standards.

Stainless Markets

The Department of Commerce found that Chinese stainless steel sheet and strip producers illegally dumped — sold at less than fair value — their products in the U.S, assigning a preliminarily dumping margin of 64-77%.

Exact Stainless MMI and Nickel Prices, Trends

The Allegheny Ludlum 316 stainless surcharge fell 7% to $0.54 per pound. Similarly, the 304 stainless surcharges fell 8% to $0.39 per pound. On the other hand, the price of Chinese primary nickel rose 5% over the month to $12,103 per metric ton. The three-month nickel price on the LME rose 8% to $1,054 per metric ton. Chinese 304 stainless coil remained flat at $2515 per metric ton.

 

The Department of Commerce has preliminarily found that Chinese stainless steel sheet and strip producers illegally dumped — sold at less than fair value — their products in the U.S.

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Commerce preliminarily found that dumping occurred by mandatory respondents, Shanxi Taigang Stainless Steel Co., Ltd. and Tianjin Taigang Daming Metal Product Co., Ltd. Commerce also determined that the mandatory respondents are not eligible for a separate rate, and therefore part of the China-wide entity.

Commerce calculated a preliminary dumping margin of 63.86% for the non-selected respondents eligible for a separate rate. Commerce preliminarily assigned a dumping margin of 76.64% based on adverse facts available for all other producers/exporters in China that are part of the China-wide entity due to their failure to respond to Commerce’s requests for information.

As a result of the preliminary affirmative determination, Commerce will instruct U.S. Customs and Border Protection to collect cash deposits based on these preliminary rates.

The petitioners for this investigation are AK Steel Corporation, Allegheny Ludlum, LLC d/b/a ATI Flat Rolled Products, North American Stainless, and Outokumpu Stainless USA, LLC.

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Commerce is scheduled to announce its final determination on or about November 25.

After gaining sharply in June and July, our Stainless MMI retraced last month. Nickel’s rally cooled down in August after a pick up in Indonesian ferronickel supply rekindled previous fears of a global supply shortage.

Philippines Supply Declines

In June and July, nickel rallied as the Philippines reviewed all existing mines in order to close those that had adverse impacts on the environment.

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At least eight nickel mines have been shut down so far this year, cutting around 10% of the country’s capacity.

Stainless_Chart_September-2016_FNL

The Philippines is by far the largest nickel ore supplier to China since Indonesia imposed an export ban for unprocessed material back in 2014. Recent numbers are already showing this decline in production. For the first seven months, China imported 13.84 million metric tons from the Philippines, down 27% from the same period last year. Read more

We rarely see such positive growth in metal prices as we did in the August MMI Price Trends Report.

MM-IndX_TRENDS_Chart_August2016_FNL-TOPVALUE100

All the metals we track were up save for Aluminum, which fell only 1.3%, and renewables and rare earths, which held flat. The Stainless Steel MMI increased 9% amid uncertainty about Chinese nickel ore supply after mining crackdowns in top supplier, the Philippines.

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Meanwhile, the most bullish of bull runs continued for our Global Precious MMI which added a 7.2% increase to its jump last month to knock on the door of the top 10% of the IndX. The platinum group metals had strong increases along with gold and silver this month.

Wall Street Bull

“Hey metal buyers, remember me?” Wall Street bull courtesy of iStock.

Palladium, particularly, made higher highs and stumbled to lower lows in classic bull market fashion.

So buy quickly before prices increase more, right? Wrong. Our Raw Steels MMI posted a healthy 4% increase, but it’s still heavily dependent on China’s stimulus programs to keep demand up in the largest global consumer of steel products. If there is a pullback in stimulus, prices could fall dramatically. The same is true for copper.

Unlike diamonds, bullish trends in commodities and industrial metals don’t last forever. Continue to make informed buying decisions in this thriving market — watch China’s stimulus program and the strength of the U.S. dollar post- Brexit — and remember that today’s price strength might be tomorrow’s carpet getting pulled out from under your feet.

Nickel, the main price driver of stainless steel, scored gains of 11% during the month of July causing our stainless MMI to surge by 9%.

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Industrial metals entered bull market territory earlier this year and that puts the wind behind nickel’s back. Apart from the more bullish macro environment, we are witnessing two key developments within nickel’s industry that are undoubtedly adding fuel to this rally.

Tighter Environmental Rules

The Philippines isn’t joking around about tightening its environmental rules. On the first of the month, the Philippines new President, Rodrigo Duterte, used some bold words against his country’s miners: “We will survive as a nation without you. Either you follow strictly government standards or you close down.”

Stainless_Chart_August-2016_FNL

The country has so far suspended the operations of seven domestic nickel mines for failure to comply with environmental regulations. Moreover, the new mining minister, Regina Lopez — a committed environmentalist — recently vowed to close more nickel mines causing environmental destruction.

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The Philippines is the biggest supplier of nickel ore to top consumer China since Indonesia banned shipments of unprocessed mineral ores back in 2014. The recent suspension of mines and the risk of more closures lifted nickel prices over the past few weeks. Read more

Vale SA is looking to sell part of its future iron ore output for Chinese cash today and the Philippines’ nickel mining crackdown has claimed its seventh victim.

Vale Brings in Chinese Investors

Brazil’s Vale SA is considering raising as much as $10 billion from the sale of up to 3% of future iron ore output to undisclosed Chinese companies, two sources with direct knowledge of the matter said.

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Under terms of the deal, Vale, the world’s biggest iron ore producer, would receive streaming financing from the companies.

Philippines’ Crackdown Claims 7th Nickel Miner

The Philippine government has suspended the operations of a seventh nickel miner, Claver Mineral Development Corp., a minister said on Thursday, deepening an environmental crackdown that has caused jitters in global nickel markets.

Free Download: The July 2016 MMI Report

The Philippines is the biggest supplier of nickel ore to top market China and the suspension of some mines and the risk of more closures sent global nickel prices to an 11-month high of $10,900 a metric ton on July 21.

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