Rising Nickel market offers firmness to stainless steel scrap prices

TORONTO (Scrap Monster): The drastic change in market’s supply fundamentals on account of ban on nickel mine production by the Philippines administration led to sharp rally in Nickel prices during recent months. The rally in prices was further aided by improved demand from China. The recovery in Nickel prices has resulted in resurgent stainless steel scrap prices.

The Philippines government had initiated mining inspections in an attempt to identify those mines that violate environmental and social regulations. Although it was doubtful whether the government will impose bans, the government did actually impose fines and mining suspensions on 18 nickel mines. The knee-jerk reaction following suspension of mining activities led to rally in Nickel prices. The nickel prices which had touched close to $12,000 per tonne have receded marginally to range between $11,000 per tonne and $11,500 per tonne. However, further rally in 2017 will depend on whether the government will go ahead with the mine suspensions.

The increased infrastructure spending by Chinese administration too contributed to rising nickel demand. Going into 2017, the Nickel’s performance is dependent on two major factors- the fate of mining ban in China and the anticipated jump in infrastructure development in the US as Donald Trump takes over as the new president of the country.

The stainless steel scrap market continued to remain buoyant during the past several months. The prices of 304 scrap climbed higher from US$ 1090-1140 per tonne to US$ 1140-1190 per tonne. Also, the prices of 316 scrap increased from US$ 1390-1440 to US$ 1470-1520 per tonne. The 409 chrome scrap prices too witnessed rise from US$ 210-250 per tonne levels to US$ 260-300 per tonne. The chrome 430 quality scrap prices were up from US$ 300-340 to US$ 340-380 per tonne.

According to recent statistics released by the International Nickel Study Group (INSG), the global nickel market has reported production deficit of 52,600 tonnes during the initial three quarters of the current year. This is in comparison with a surplus of 74,800 tonnes during the corresponding nine-month period in 2015. Also, INSG forecasts a deficit of nearly 66,000 tonnes for the whole year 2016. It foresees the nickel market to continue to remain in deficit in 2017 as well.

Incidentally, INSG Insight Report indicates that Brazil, Mexico and the US turned out to become net exporter of stainless steel scrap during the entire year 2015. The net imports by Brazil totaled around 1 kt. On the other hand, the country’s exports increased by nearly 5% to 44 kt. Mexican exports surged higher by 6.5% to total 124 kt, whereas the imports totaled less than 1 kt. The US imports tumbled by 42% over the previous year to 192 kt.

Among European countries, the key net importers were Belgium, Finland and Spain. The three relevant net exporting countries in the European region were France, the Netherlands and Germany. Among Asian countries, India, Taiwan, China and Korea were net importers. Meantime, Japan remained net exporter of stainless steel scrap during the year. In Oceania and African region, South Africa and Australia turned out to be net exporters of stainless steel scrap during the year.