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Prices settle as sentiment deteriorates

As the LME launches a review of the market chaos in March, production dips in most major economies.

LME nickel prices through late June were up around 8% for the year-to-date, by far the best performance among the major base metals as stocks in LME warehouses declined to less than 67 000 tonnes, down from more than 232 000 tonnes this time last year.

However, the same factors that have been pulling other metal prices lower recently are also weighing on nickel and stainless steel, including concerns that elevated inflation levels, tighter monetary policies, and ongoing supply chain disruptions will damage the global economy in the second half of 2022.

In addition, market participants’ confidence in the LME following the nickel market meltdown in March has yet to be fully restored. As a result, market sentiment has deteriorated significantly.


The brief spike in LME nickel prices above US$ 100 000 per tonne that triggered the suspension of trading in March may seem like yesterday’s news given nickel’s recent trading levels below US$ 24 000 per tonne. But the loss of confidence in the exchange’s ability to manage market disruptions continues to loom large.

At the Bureau of International Recycling’s Convention in Barcelona in May, LME head of market development Robin Martin acknowledged nickel trading volumes were down 15-20% this year and that the LME was ‘under no illusion that we have a lot of work to do to rebuild trust in the market’.

Part of the exchange’s confidence rebuilding programme includes an independent investigation of the disruptive events in March. On 23 June, the LME announced the appointment of management consultancy firm Oliver Wyman to conduct the review to broadly cover ‘the factors that contributed to market conditions in the nickel market in the period leading up to, and including, 8 March 2022 and make recommendations to reduce the likelihood of similar events occurring’.

The LME Group’s market structure, trading rules and controls, contract specifications, and risk management policies are all in the review’s scope, with recommendations expected in December 2022.

In the meantime, nickel and stainless steel market participants continue to adapt to challenging conditions that are being compounded by the war in Ukraine and tighter nickel market dynamics. In late June, Vladimir Potanin, described as Russia’s ‘Nickel King’ due to his 36% stake in Nornickel, was included in the latest wave of UK sanctions on Russian oligarchs and corporations.

Nickel consumption in Russia/CIS during Jan-Apr 2022 was reportedly unchanged year-on-year, but global demand growth has failed to keep pace with production gains this year according to the International Nickel Study Group.

During the first four months of 2022, INSG reports global refined nickel production rose 13.3% year-on-year to 934 700 tonnes, outstripping the 6.1% increase in nickel usage and leaving an implied market deficit of just 8 100 tonnes.


The slower than expected growth in nickel usage this year is closely connected to the downturn in global stainless steel output. According to the International Stainless Steel Forum, world stainless steel melt shop production declined 3.8% year-on-year to 14.45 million tonnes during the first quarter of 2022.

Of note, the ISSF figures show first quarter stainless steel production was down 8% in China, 2.5% in Europe and 8.8% in the United States. As production has slowed and stainless raw material input prices have cooled, Oryx Stainless reports fewer new orders from commercial and private consumers, along with seasonal maintenance shutdowns.

Stainless steel producers in Europe and the USA are also reportedly confronting a surge in…

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‘In summary, the risks to the downside in nickel consumption appear to be growing as supply growth continues to accelerate,’ Macquarie reports.

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