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.

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 warehouses 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 nickel markets is overwhelming, with exports of nickel in the second quarter hitting the 450 000 tonne mark, equal to 53% of global supply’. Indonesian nickel production in all forms is reportedly 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.

Operations disrupted

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 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 conditions and weaker overseas demand for Chinese goods.

More on the nickel and stainless market developments in the September/Octuber issue of Recycling International.