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Nickel market tight on short supply

Mar 13, 2014 | 02:50 PM |

Tags  nickel, stainless steel, London Metal Exchange, LME, briquette, cut cathode, copper

NEW YORK — The spot market for refined nickel remains tight in North America as a lack of available material and rising London Metal Exchange prices put upward pressure on premiums, market participants said.

AMM’s premiums for melting-grade nickel were steady at 23 to 30 cents per pound this week and premiums for plating-grade material held at 60 to 70 cents per pound, but trader and consumer sources said they had seen higher premiums in recent weeks, with briquettes difficult to secure and strong demand from stainless and specialty steel producers driving up numbers.

The LME’s three-month nickel contract continued to enjoy its highest levels since April last year, closing the official session March 13 at $15,775 per tonne ($7.16 per pound), up 11 percent from $14,215 per tonne ($6.45 per pound) Feb. 27, as the market continues to react to the economic consequences of political instability in Ukraine.

LME nickel stocks in excess of 270,000 tonnes have had little influence on physical supply in North America.

“Demand for flowable material is strong,” one trader told AMM, noting that mill discounts for ferronickel material “are nonexistent” at the moment. “Stainless mills are running full out and scrap availability is getting tight, forcing the mills to buy virgin nickel.”

“Nickel is tighter and tighter,” a second trader said. “It’s very interesting. I think premiums are going to go up, because those of us who are holding cut cathodes know that if a steel mill can’t find scrap and wants to buy the product, they have to buy cut cathodes.”

The second trader dismissed the notion that instability in other base metal markets—such as copper, which reached a four-year low in Comex trading this week (, March 12)—would cross over into the nickel market.

“Copper is not the same as nickel. Nickel is more of a physical commodity nowadays,” he said. “I would say copper is more of a financial instrument than a physical commodity.”

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