Page 59 from: May 2015

59May 2015

China’s GDP growth slowed to 7.0% in the fi rst quarter of this
year, according to government fi gures.
Industrial production in March was
5.6% below that of the same month
last year and retail sales also deceler-
ated, it was revealed to the US Institute
of Scrap Recycling Industries’ latest
Spotlight on Nickel session by Joe Pick-
ard, the organisation’s chief economist
and director of commodities.
And right now, China was stuck between
a rock and a hard place, delegates were
told by Edward Meir of New York-based
INTL FC Stone. Industrial consolidation
that leads to job losses was ‘politically
not palatable’, nor could the country
continue to stimulate the economy. ‘All
these excesses have to be scaled back
eventually,’ Meir said. ‘If they do that,
once they start this retrenchment, we will
see a supply-side response for many
commodities and could have a higher
level of prices next year.’

‘Prices will rise’
Looking at the global nickel supply pic-
ture, Indonesia’s ban on nickel ore

exports – which began last year – had
the potential to reduce primary nickel
supply, but the Philippines had stepped
in and ‘supplied all the nickel needs of
the Chinese in a couple of months’, Meir
pointed out. If the Philippines couldn’t
keep up with Chinese demand, ‘prices
will rise’, he concluded. However, Indo-
nesia will eventually re-enter the market
with refi ned nickel and nickel pig iron. A
slow return could support nickel prices
in the short term, the speaker said, but
eventually both countries’ supply would
be ‘a lid on the upside of prices’.
The latest International Nickel Study
Group forecast indicates a slight supply
surplus in 2015, Pickard pointed out. But

Meir noted that other analysts were pre-
dicting a defi cit, leading him to conclude
the market was pretty much balanced.

Hurt by strong dollar
The LME three-month average nickel
price went up 12% from 2013 to 2014,
but it had fallen 17% in the year to
date – the second-steepest decline
among the base metals, Pickard noted.
The World Bank was predicting 2015
nickel prices of US$ 14 200 per tonne,
which he regarded as ‘a little low’.
In addition to primary nickel hitting
historically low prices, chrome, iron and
molybdenum were also down, pointed
out Rich Jones, Chicago-based general
manager for ELG. China’s situation has
a direct impact on the US stainless
industry, according to Jones. US mills
were facing greater competition from
imports of Chinese stainless, some of
which had been redirected to North
America after China lost an anti-dump-
ing case against the EU, he said.
The strong dollar is also hurting stainless
scrap processors and traders by making

US exports less competi-
tive and increasing compe-
tition from overseas sup-
pliers of stainless scrap
and stainless steel, Pickard
observed. US stainless
scrap exports fell around
15% last year to 548 000
tonnes and that trend has
continued into 2015, with
exports in January and

February down 21% compared with the
same period in 2014.

Arisings to fall
Domestic demand for US stainless
scrap is down 12-15% this year,
according to Jones, with the two big
domestic stainless producers – North
American Stainless (NAS) and Outo-
kumpu – fi nding it cheaper to import
stainless scrap than to purchase it
domestically. Also, and despite consis-
tent US economic growth and improv-
ing labour market conditions, US con-
struction spending was falling and
steel industry capacity utilisation rates
had plummeted since the start of the
year, Pickard pointed out. Scrap aris-
ings were expected to be 20% lower
this year, in part due to the harsh win-
ter in the US Northeast, Jones added.
Despite the current weakness in the US
stainless market, the speakers at the
Vancouver meeting saw potential for
growth. Outokumpu had constructed
a new US mill in 2012 and NAS had put
US$ 116 million into an annealing line
and cold-rolling mill recently, indicating
that both were expecting future
growth, Jones said.
Pickard identified the underlying
strengths in the US economy, leading to
a positive medium- to long-term outlook.
But he cautioned that imports – notably
the dumping of stainless and carbon
steel on the US market – could be a huge
determinant of domestic demand and of
the health of the industry.

S P O T L I G H T O N N I C K E L & S T A I N L E S S By Rachel Pollack

Edward Meir: a slow return
could support nickel prices.

Joe Pickard: strong dollar hur-
ting stainless steel processors.

Domestic demand for US stainless steel scrap has
declined by as much as 15% this year as leading con-
sumers have found it cheaper to import than to pur-
chase at home, according to speakers at the US Institute
of Scrap Recycling Industries’ latest Spotlight on Nickel
& Stainless session. However, feedback from the
Vancouver meeting was not entirely negative.

US mills under pressure from
China’s stainless exports

RI 4-Spotlight Nickel&Stainless.indd 59 01-05-15 13:39