Page 102 from: May 2013

102 May 2013

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

Nickel & Stainless

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15

16000

20000

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32000

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12000

2009 2010 2011 2012 2013

– LME stocks (x 1000 metric tonnes)
– LME prices (in U.S. dollars/MT)

Nickel (global) Closed: May 12013

Closed: May 1 2013

A gathering of dark clouds

Over the course of the last month, stainless steel scrap
has fallen victim to price erosion: the range for the
304 quality has declined from US$ 1600-1650 to
US$ 1500-1550 per tonne, while that for the 316
grade has slid from US$ 2260-2310 to US$ 2150-
2200. As for chrome scrap, 409 material has dipped
from US$ 430-470 to US$ 400-440 per tonne
while the 430 quality has dropped by a similar
amount to US$ 480-520.

Stainless steel scrap values have expe-
rienced a further bout of depreciation
since the beginning of April. Prices for
304 scrap have fallen by some US$ 100
per tonne and stood recently at
US$ 1500-1550, while prices of the
316 grade have dropped to US$ 2150-
2200. And chrome scrap prices have
also headed lower, with the 409 qual-
ity losing some US$ 30 per tonne over
the course of the month to trade at
US$ 400-440 while the 430 grade has
weakened to US$ 480-520 (The US
dollar/Euro exchange rate was around
the 1.30 mark at the time of writing.)
Gloomy weather conditions attended
the start of the 36th stainless steel
seminar run by Heinz H. Pariser’s Alloy
Metals & Steel Market Research; during
the day, however, the sky cleared and
the sun began to shine. But the dark
clouds persisted over the seminar itself
following confi rmation of last year’s
large gap between primary nickel pro-
duction and consumption and of an
unexpectedly substantial nickel unit
surplus originating from stainless steel
scrap. The fi gures below, confi rmed by
the International Nickel Study Group,
came as a shock to many delegates:
One key factor to emerge from the
seminar was that Chinese nickel pig
iron is fl ooding the nickel market.
In spite of these negative fi gures, the
mood during the seminar was not too

depressed; perhaps delegates had
come to the conclusion that market
conditions could hardly get any worse
than they currently are.
Other interesting fi gures presented dur-
ing the seminar showed developments
in global stainless steel production last
year alongside expectations for 2013
and 2014. In effect, the belief is that, as
early as next year, China will account
for more than half of a world stainless
steel production that will exceed
40 million tonnes for the fi rst time.

Chrome
No clear picture has emerged in the
chrome market and prices are relatively
stable at present. European charge
chrome prices have been higher on
scarce availability but spot sales have
been marginal. European mills have

been complaining about the strong US
dollar. A weaker Euro has raised ferro-
chrome costs by at least 7% even
though the benchmark was not
increased. And with Europe’s growth
prospects close to zero, the Euro should
continue to fall against the US dollar.
South Africa’s ferro-chrome production
fell 4.4% from 3.354 million tonnes in
2011 to 3.207 million tonnes last year.

Europe
The European nickel market is cur-
rently suffering from a lack of orders
for the stainless steel industry. In addi-
tion, many hedge funds – the activities
of which have held the nickel price
at high levels in the past – have pulled
out of the market to a large extent.
LME three-month prices have fallen of
late and demand remains very slow. In

Germany, meanwhile, nickel cathodes
have been yielding US$ 15 010 per
tonne. Alloyed scrap prices have
dropped in line with primary nickel
values, with V2A (304) trading recent-
ly at US$ 1539 per tonne and V4A
(316) fetching US$ 2193.

China and elsewhere
in Asia
According to data from China’s Cus-
toms Offi ce, the country’s imports of
refi ned nickel and its alloys declined
some 6% to 13 877 tonnes in March,
while overseas purchases throughout
the fi rst quarter jumped 23% year on
year to 48 824 tonnes. Chinese exports
fell 18.5% to 3162 tonnes in March
and 20% during the fi rst three months
of 2013 to 7403 tonnes.
In early April, the nickel price on the

By Gerhard Teborg et al

Who is moving fi rst? Nickel is test-
ing the support line at 7 $/lb. It will
take some strong action from Ni
producers demonstrating their will-
ingness to curtail production
before this price slide can be
revised. But so far nobody seems
to be ready to ‘bite the bullet’ and
move fi rst.

RI-4_Analysis Nickel&Stainless.indd 102 03-05-13 14:28