MARKET ANALYSIS
Headwinds for nickel and
stainless steel
For recyclers of nickel and stainless steel, global market fundamentals continue to
pose challenges. Excess nickel supply, China’s sputtering economy, diminished
stainless steel demand in the West, and lack of confidence in exchange trading
continue to weigh on sentiment.
disruption proved to be short-lived as
investors remain focused on China.
S&P Global reports business sector
growth in China slowed to the lowest
pace in eight months in August amid
deteriorating property market condi-
tions and weaker overseas demand for
Chinese goods.
Reports of fraudulent nickel trading
activity have also contributed to the
erosion of confidence in the nickel
market. Earlier this year, major com-
modity trader Trafigura took a US$ 577
million charge against cargoes of nickel
that turned out to be steel. US metals
trader Kataman Metals alleged in
August that it paid US$ 3.3 million for
151.5 tonnes of nickel that was in fact
steel waste. Nickel and stainless steel
market participants continue to
explore alternatives to the LME as a
reliable basis for their trades.
Singapore’s Abaxx Commodities
Exchange is reportedly planning on
launching a physically-settled nickel
sulphate contract by the end of the
year.
MARKET SLOWDOWN
Reduced manufacturing output in the
major industrialised economies has
been weighing on output and pricing
across the stainless steel supply chain,
including stainless steel scrap.
According to BIR stainless steel and
special alloys committee chair Joost
Van Kleef from Oryx Stainless, ‘Apart
from a few Asian countries such as
India, global manufacturing has seen a
significant slowdown amid central
banks striving to fight inflation. Real
demand for stainless steel has con-
tracted in many regions, including
Europe.’ Macquarie Research is fore-
casting stainless steel production in
Europe will decline 3.5% in 2023 to 6.1
to 53% of global supply’. Indonesian
nickel production in all forms is report-
edly surging 40% higher this year,
prompting the International Nickel
Study Group to estimate global nickel
supply will exceed demand by more
than 200 000 tonnes in 2023.
Complicating the supply picture, the
Indonesian government reportedly
delayed issuing mining quotas for state
miner PT Aneka Tambang Tbk (Antam)
in August, disrupting operations and
incentivising Indonesian smelters to
import nickel ore from the Philippines.
However, support for nickel prices
stemming from the Indonesian supply
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Nickel prices remained under pressure
late in the third quarter with nickel
futures at the London Metal Exchange
trading around US$ 20 000 per tonne
in early September, down more than
one-third from the beginning of the
year as nickel stocks in LME warehous-
es hovered around 37 000 tonnes.
Softer economic indicators in China,
along with rising nickel output in
Indonesia, have been major sources of
concern. Macquarie reports that ‘the
impact of Indonesia on the global nick-
el markets is overwhelming, with
exports of nickel in the second quarter
hitting the 450 000 tonne mark, equal
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