Page 91 from: Recycling International May/June issue 2023

NICKEL & STAINLESS

is projected to increase another 10%
in 2023, resulting in an expected
global supply surplus of 239 000
tonnes this year, equivalent to 7.6% of
world nickel usage. In light of the
global market imbalances and price
uncertainty, participants continue to
seek out alternative financial instru-
ments to hedge their risk exposure
following the meltdown in LME nickel
trading last year.

NEW CONTRACTS?
There has been considerable specula-
tion about the creation of new
exchange-traded nickel contracts but
the Financial Times reported in April
that the CME Group had decided to
not launch one, according to state-
ments from CME Group chairman and
ceo Terry Duffy. According to Edward
Meir from the Marex Group, a new
Class 2 nickel contract would be more
useful than another Class 1 nickel con-
tract given the increasing share of
nickel pig iron and nickel sulphate
production and consumption by nickel
and stainless steel market partici-
pants.

PRODUCTION SLUMP
According to the latest estimates from
the World Stainless Association
(worldstainless), global stainless steel
melt shop production declined 5.2%
year-on-year in 2022 to 55.26 million
tonnes. Among the major stainless
steel producing regions, worldstain-
less reports melt shop production in
Europe declined 12.4% in 2022,
accompanied by a 14.8% decrease in
the United States. While China
remains the world’s dominant produc-
er of stainless steel, Chinese melt
shop production declined 2% in 2022
to 31.975 million tonnes. According
to the CRU Group, stainless steel end-
use demand slowed significantly in
the second half of 2022 ‘as mounting
inflationary pressures and rising inter-
est rates steered consumers away
from durable goods. Demand from
the construction sector and from
household appliance manufacturers in
particular was severely hit by the eco-
nomic slowdown’.

POTENTIAL RESTRICTIONS
Global stainless steel production lev-
els were still depressed in early 2023,
according to Macquarie Research,
with output levels not expected to
recover until the second half of the
year amid reports of excess nickel pig
iron inventories in China and loss-
making operations in both China and
Indonesia.
For exporters of recycled stainless
steel, potential trade restrictions
including the revised EU Waste
Shipment regulations and potential
expansion of the Basel Convention to
include metal alloys continue to loom
large. However, US exports of stain-
less steel scrap during the first two
months of 2023 surged 120% higher
year-on-year to more than 73 000
tonnes thanks to improved demand
from India, Taiwan, Mexico, and
Canada.

Indonesia’s nickel boom to keep market in supply
surplus
The International Nickel Study Group has published data
indicating that the nickel market was in a surplus of over 40 000 tonnes in
January and February. While major producers like Glencore (-32%),
Nornickel (-9%), Vale (-10%) and South 32 (-6%) have experienced produc-
tion declines year-on-year, the falls have been offset by a a strong increase
in Indonesian nickel production of over 20% year-on-year. The expected
growing concentration of supply from Indonesia is likely to leave the nickel
market in surplus until 2027.

Reference date: May 1, 2023

91recyclinginternational.com | May/June | 2023

CLOUDY OUTLOOK
Despite relaxed Covid restrictions in
China and expectations for easing
inflation in the West, the outlook for
global economic growth remains
cloudy at best, a troubling situation for
stainless steel recyclers and manufac-
turers. According to the International
Monetary Fund’s April World Economic
Outlook, ‘Global economic activity is
experiencing a broad-based and sharp-
er-than-expected slowdown, with infla-
tion higher than seen in several
decades. The cost-of-living crisis, tight-
ening financial conditions in most
regions, Russia’s invasion of Ukraine,
and the lingering Covid-19 pandemic
all weigh heavily on the outlook.
Global growth is forecast to slow from
6.0% in 2021 to 3.2% in 2022 and 2.8%
in 2023. This is the weakest growth
profile since 2001 except for the global
financial crisis and the acute phase of
the Covid-19 pandemic.’

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