Skip to main content

Markets riddled with uncertainty

Falling stainless steel output, Covid shutdowns in China, rising interest rates, soaring energy costs in Europe, trade barriers and nickel surpluses all add to the uncertainty facing recyclers.

Nickel prices at the London Metal Exchange have been hovering between US$ 21 000 and US$ 24 000 per tonne in recent months as nickel stocks in LME and SHFE warehouses continue to decline. As of early November, LME nickel stocks were down to around 52 000 tonnes, compared to more than 140 000 tonnes this time last year.

At the same time, nickel trading volumes at the LME have been falling in the aftermath of the market turmoil in March as the exchange works to regain the confidence of market participants following the cancellation of trades and subsequent lawsuits filed by Elliott Associates and Jane Street Global Trading.

As Andy Home at Reuters reports, the crisis of confidence in the LME ‘mirrors the chaos that has been playing out in physical metal supply chains. A highly globalised industry has been fractured by Covid-19 lockdowns, the ensuing turmoil in the global shipping sector and the geopolitical stress caused by Russia’s invasion of Ukraine’.


To further complicate matters, the LME is considering whether to de-list Russian metal brands and prohibit deliveries of Russian metal into LME warehouses. On 6 October, the LME published a ‘Discussion Paper on Russian Metal’ outlining the ethical and commercial considerations associated with accepting Russian metals including nickel, copper and aluminium.

The exchange requested input from market participants on three possible outcomes:

  • Maintaining the current position with no further action until sanctions are imposed by international governments
  • Introducing thresholds for warranted Russian metal, above which the LME would move to suspend further deliveries
  • Suspend the warranting of Russian metal in LME warehouses either immediately, following a notice period, or after a specified date.

For nickel and stainless steel recyclers, the potential market disruptions caused by re-directed shipments of Russian primary metal could generate significant unintended consequences including displaced demand for recycled materials in certain markets.


Amid widespread expectations for weaker global economic growth and consumer demand in the near term at least, stainless steel production has slowed sharply across the major industrialised economies this year. According to the latest estimates from worldstainless (formerly the International Stainless Steel Forum), global stainless steel meltshop production declined 3.5% year-on-year in the first half of 2022 to less than 29 million tonnes.

Among the major stainless producers, worldsteel reports Chinese stainless steel production declined 5.3% during the first half of the year, while output in the United States and Europe declined 14.7% and 5.2%, respectively.

Rising energy costs stemming from the war in Ukraine have raised concerns that there will be additional metal production curtailments in Europe. In the US, the drop in output has been accompanied by falling levels of capacity utilisation, with the American Iron and Steel Institute reporting US steel industry capacity utilisation rate dipped below 75% in late October, down from….

Read the full stainless & nickel update in our latest issue >>

Don't hesitate to contact us to share your input and ideas. Subscribe to the magazine or (free) newsletter.

You might find this interesting too

Plastics outlook: prime prices offer little respite
Economic uncertainty clouds trade
Textiles update: weaker demand adds to woes

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Subscribe now and get a full year for just €169 (normal rate is €225) Subscribe