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What happened to Nickel in September?

16 October 2015
Author :  
Photo: Norilsk Nickel

 

Price of nickel mainly remained below the psychologically important level of $ 10,000 per ton in September, but it didn't break the record low price from 2009.

 

The negative trend in September was especially emphasized when the price of nickel decreased to very low $ 9,100 / t and threatened to break the record low price of $ 8,850 / t recorded more than six years ago. However, the record is not broken yet, to the great relief of all market participants.

All producers of nickel were very satisfied last year. In January 2014 Indonesia introduced a ban on the export of minerals and according to trends it supposed to lead to a noticeable deficit of nickel in the world market. This approach to forming the prices led to a significant increase in the value of nickel by 60% with a peak in June last year, when the price of nickel reached $ 20,725 / t. Price speculation, however, didn't pay off. The Philippines took advantage of the absence of Indonesia on the market and made up part of the deficit, bringing the price up to the level of 14 to 15,000 US dollars in the beginning of the year. Another impact on exaggerated prices was made by China with reduced orders, which led to a steep decline to the September minimum price of $ 9,100 / t.

 

Nickel - Price chart LME

 

Since nickel strongly influences the pricing of stainless steel, its low price has led to a chain reaction where stainless steel became significantly cheaper and - especially the alloying surcharges. It is important to point out that this is not caused only by the lower price of nickel, but the stainless steel market is already undermined by the cheap surpluses from China. This led to an absurd situation where producers of nickel are those who suffer the most.

The EU and USA are asking China to reduce the production of stainless steel in order to ease the pressure on their economies, however, if China really reduce production, it will further reduce demand for nickel in the world market. We have a vicious circle, everyone wants nickel prices to rise, but no one has a solution to spend the accumulated stocks of this metal. In this scenario, even the most optimistic analysts do not see the solution of the problem. Some say that the problem of low prices of nickel will be best solved by even lower price ...

 

In the long term, everyone will be satisfied if the nickel price is stabilized at $ 10,000 - 11,000 per ton, until the the equation of supply and demand changes in one way or another.

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