Page 38 from: January / February 2016

36 January/February 2016

M A R K E T A N A L Y S I S

Nickel & Stainless
Closed: January 19, 2016

So have scrap prices reached
their floor?
Stainless steel scrap prices have fallen no further
since our report towards the end of last year,
prompting sectoral experts to ponder whether
values have finally bottomed after months
locked into a downtrend. The unchanged
price ranges are as follows: US$ 890-940
per tonne for the 304 quality; US$ 1200-
1250 for 316; US$ 200-240 for 409; and
US$ 300-340 for 430.

There has been no change in stain-less steel scrap prices since our
previous report of late November last
year. With the same exchange rate of
US$ 1.087 to the Euro at the
time of writing, the price
range for the 304 quality
remained at US$ 890-940 per
tonne while 316 material has
held at US$ 1200-1250. Despite
the fact that steel scrap values have
remained low, chrome scrap prices
have continued to command US$ 200-
240 per tonne for the 409 grade and
US$ 300-340 for the 430 quality deliv-
ered trader’s yard.
Market participants have been com-
plaining about low levels of availabil-

ity for all kinds of scrap, assuming this
situation will continue into the future
as a result of a large proportion of
production ending up abroad. The low

quotations for nickel, chrome
and steel scrap, as

well as relatively cheap energy prices,
have allowed stainless steel producers
to reduce scrap usage in their melts and
to increase primary metal inputs.

Downward pressure
on nickel

In the early days of 2016,
nickel prices drifted below

US$ 8300 per tonne in reaction
to: further confirmation of China’s

slowing growth; the lack of a supply-
side response; and a strengthening US
dollar. Bearish macro data for China, a
plunging stock market and a weakening
currency have combined to maintain
downward pressure on the nickel mar-
ket. Further falls in energy prices and

currency depreciation have also acted
to lower production costs in non-dollar
parts of the world.
In the second week of the year, the
nickel price was little changed at around
US$ 8400 per tonne despite the fact
that commodity index rebalancing con-
tributed to price volatility. Substantial
buying of nickel contracts on the LME
in the six days from January 8 onwards
was viewed as an opportunity by the
speculative/investment community to
sell at a higher price level. LME data
show that money managers have
reduced their net long positions from
4.8% during the previous week to 4.6%
at the time of writing. A slight nickel
price recovery at the end of the second
week of the month and the beginning of
the third to US$ 8700 per tonne could
not be realised given the rising stocks
in LME warehouses.
The International Nickel Study Group
(INSG) has reported an unexpectedly
high nickel market oversupply of 53 200
tons for last year’s January-November
period.

No increase expected
For chrome, market experts are predict-
ing a further price decline for the current
quarter. Furthermore, steel scrap prices
are not expected to increase despite the
fact that the winter season in many of
the key regions of the world normally
spells a reduction in collection volumes.

By Gerhard Teborg et al

Closed: January 19, 2016

Nickel prices have remained at a
level below 9000 USD/t in early
2016. The global economic situ-
ation (uncertainty in China, fur-
ther low oil prices, weak process
industry) does not indicate fast
price surges for Q1/16. Many
nickel producers are unprofitable
at the moment. This could lead
to temporary production stops.
China: Rising NPI prices amid
a weak demand are supporting
the purchase of nickel units from
other sources.