Page 67 from: May 2011
demand coming on-line for demand in the ener-
gy space,’ he concluded. Likewise, nickel alloys
have strong resistance to sea-water, and thus find
use in offshore drilling platforms and other deep-
sea infrastructure related to the oil industry.
The first part of the question-and-answer sec-
tion at the Nickel & Stainless Spotlight saw the
focus switch to the peculiarities of the Indian
market, and its use of lower-nickel-content
stainless. George Vorloss of Millennium Metals
pointed out that, although there is much high-
er stainless per capita use in India as compared
to the USA, there are also fewer high-temper-
ature and high-pressure applications requiring
a high nickel content. Thus, it is much easier
for them ‘to substitute to a 201 or 400 series’.
Residual elements
Alistair Gledhill of ELG Metals took up the
topic of substitution and India, and pointed
out that the stainless steel coming out of India
generally has ‘higher manganese content, high-
er silicon content’. If nickel prices continue their
upward trajectory, Mr Gledhill surmised that
those kinds of substitutions will increase. For
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ELG as a scrap buyer, the questions become:
‘How do we deal with those higher residual
elements?’ and ‘Where do we find better scrap
units to bleed out those residual elements?’
In response, Mr Schenker agreed that substitu-
tion would be a factor in the market, but he went
on to argue that its overall impact may be lim-
ited due to the fact that much of the demand
coming on-line cannot be substituted. ‘In the
wake of the BP oil spill,’ he noted, ‘I highly doubt
that oil companies will risk going to lower grades
of stainless for their offshore drilling operations.’
Futures and future expectations
When the discussion in Los Angeles shifted to
market dynamics, the panel was in general
agreement that the laws of supply and demand
were no longer sufficient to explain price move-
ments. ‘It is a market impacted by supply and
demand fundamentals,’ Mr Schenker noted. ‘But
it is also impacted by what happens in the trad-
ing world.’ Futures – and future expectations –
are influencing the price, he suggested, and so
is the claimed fact that the world has only 50
years of below-ground nickel supply remaining.
Buyers, he asserted, are buying five to 10 years
out with constrained global supplies in mind.
Other panellists were more circumspect about
the possibility of future nickel shortages, point-
ing to above-ground supplies and substitution
as a means of mitigating the risk.
For example, Mr Gledhill noted that price
volatility has not only become a factor in the
markets, but that it was becoming the key mar-
ket factor in determining how the industry
reaches strategic decisions. ‘More and more
metals players – from top to bottom, from scrap
to the mill to the service centre – are looking for
ways to mitigate the risk,’ he contended. And
this, he implied, is expanding the role of the
financial sector within the industry.
Volatility concerns
According to Mr Schenker, producers of primary
scrap have also been shaken by volatility concerns,
and many are moving towards tolling agreements
as a means of mitigating price risk. With that in
mind, he suggested that, if anyone in the audience
counted primary scrap producers as suppliers,
they should hold them ‘near and dear’.
p066_ISRI Nickel.indd 67 02-05-11 09:38
