Page 66 from: October 2016

66 October 2016

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

Nickel & Stainless
Closed: October 1, 2016

Volatility rules the nickel market
Although high levels of volatility have dominated the
nickel market in recent weeks, stainless steel scrap
values are contained within the same ranges quoted
in our previous report – that is, US$ 1090-1140
per tonne for the 304 grade and US$ 1450-1500
for the 316 quality. Chrome scrap prices also
remain within the same brackets as five weeks
ago at US$ 230-270 per tonne for 409 material
and US$ 310-350 for the 430 quality.

Stainless steel scrap traders are behaving very cautiously in a
highly volatile nickel market. Over the
course of the five weeks since our pre-
vious report, the metal’s price on the
LME has fluctuated between US$ 9500
and US$ 10 700 per tonne. Uncertainty
over future developments in the nickel
market prompted market participants
to become more circumspect in their
activities, particularly concerning pur-
chasing prices for scrap.
Unsurprisingly, scrap prices remained
relatively stable and refused to follow
every undulation in the nickel quotation.
At the time of writing and with a cur-
rent exchange rate of US$ 1.124 to the
Euro, buying price ranges for 304 and
316 stainless steel scrap are unchanged
from those quoted in Recycling Interna-

tional’s September issue at, respectively,
US$ 1090-1140 and US$ 1450-1500
per tonne.
Chrome scrap prices are also to be
found within the same ranges as five
weeks ago at US$ 230-270 per tonne
for the 409 grade and US$ 310-350 for
the 430 quality.
The restocking phase at traders’ yards
has come to an end after the holiday
period and these volumes are now
awaiting consumers.

Speculative selling
Looking back over recent weeks,
nickel prices initially dipped below
US$ 10 000 per tonne before a weaker
US dollar provided the support to
enable the market to regain this level.
In addition, news from the Philippines

suggested more nickel mines could be
forced to shut down.
The nickel price drifted from above
US$ 10 000 per tonne to US$ 9725
as speculative selling was prompted
by a stronger US dollar and a lack of
bullish news from the Philippines with
the delay of a mining audit. This price
correction certainly came as no surprise
to the market.
Grounds for optimism were then pro-
vided by latest International Nickel Study
Group statistics showing a deficit for the
metal in June of 5200 tons, contributing
to a total for the first half of the year of
42 500 tons. Nickel prices climbed again
above US$ 10 000 per tonne, assisted by
speculative buying on the back of news
of possibly more mine closures in the
Philippines and a weaker US dollar.
It is becoming increasingly obvious that
the situation in the Philippines is heav-
ily influencing the market. The country’s
environmental regulator has recom-
mended the suspension of operations at
another 20 mines which, it says, account-
ed for more than half of annual mineral
production values in 2015, thereby tight-
ening the screw on domestic producers
but providing a boost for nickel-related
equities in the region.

Leap for ferro-chrome
According to Heinz H. Pariser Alloy
Metals and Steel Market Research,
EU imports of charge and high-carbon
ferro-chrome totalled 132 000 tons

in June for a leap of 20.6% over May.
Compared to the same period in 2015,
however, imports were 14.3% lower.
Imports of charge and high-carbon
ferro-chrome into the major EU con-
suming markets amounted to 109 000
tons, in line with the volumes imported
in April. Albeit aggregated, import vol-
umes during the first five months of
2016 were down 17.5% year on year
at 546 000 tons but showed a recovery
from the significantly weaker second
half of 2015.
According to South Africa’s depart-
ment of mineral resources, production
of ferro-chrome slowed by 20.4% in
June to 255 000 tons while the run-
ning total for the second quarter fell
9.1% to 880 000 tons when compared
to the opening three months of the year.
Output of 1.8 million tons across the
first half of 2016 represented a decline
of 5.5% over the same period last year.
According to Heinz H. Pariser, EU-28
stainless steel imports from third
countries declined by 22.5% year on
year to 170 946 tons in the first half
of 2016 while exports slumped 70.8%
to 47 935 tons in the first five months
of 2016.

Europe
Reports indicating tighter nickel supply,
mainly because of a decline in exports
from the Philippines, enlivened Euro-
pean prices once again. Meanwhile,
conditions have eased for dealers and

By Gerhard Teborg et al

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