Disruption to trading in March continues to dog the market, on top of a range of other difficulties, including supply chain issues, transportation bottlenecks, labour shortages as well as rising energy and raw material costs.
But disruption of nickel trading at the London Metal Exchange in March added a new dimension to the challenges facing metal market participants. LME nickel serves as a key source of price guidance that is factored into a wide range of contracts for primary and secondary metals and alloys. While nickel trading in London has resumed, the loss of confidence in the exchange’s ability to provide transparency and liquidity at a time of rising geo-political risks has yet to fully recover.
Prior to the LME meltdown, there were already significant sources of concern surrounding the health of nickel and stainless steel markets, most notably the potential for sanctions against Russian nickel producers following the invasion of Ukraine, China’s wobbly property market, Covid shutdowns and how central banks would combat elevated inflation levels.
Russian giant Nornickel, the largest producer of refined nickel in the world, indicated it will redirect metal for Europe or the US to China and other countries that have not sanctioned Russia. For the first quarter of 2022, Nornickel reports its nickel production actually rose 10% year-on-year to nearly 52 000 tonnes. Through the end of last year, global stainless steel production was also on the rise.
The International Stainless Steel Forum reports world stainless melt shop production rose 10.6% in 2021 to 56.3 million tonnes, including a 13.6% increase in European stainless production and a 10.4% increase in the United States.
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