NEW YORK Nickel premiums
have fallen to multiyear lows as supply continues to outweigh
Premiums for melting-grade
material have fallen to between 20 and 25 cents per pound, a
range not seen since December 2003, while plating grade is at
50 to 60 cents per pound, the lowest range since August
"Theres a lot of
competition on the business . . . and I dont
see that changing in the future. To me, its because
business is slow in Europe and suppliers are trying to unload
material over here," according to one trader.
"The European stainless market
is rubbish and China doesnt look that great. The U.S. is
a bright spot, but then its also not that bright," an
analyst said, adding that continuously falling nickel prices on
the London Metal Exchange are "putting (stainless) distributors
off from restocking,"
The spot market hasnt been
overly active, a situation unchanged from earlier in the
"There hasnt been a whole
lot of action, and now were heading into the summer
months," a second trader said.
Stainless mills, most of which
are locked up in long-term contracts for most of their
requirements, are said to be taking less material. Meanwhile,
quantities sold to foundries, which have made up the bulk of
this years spot business, remain unchanged, sources
Recent low nickel prices have
led some consumers to show more interest, although purchasing
hasnt increased significantly.
Sources were puzzled by the
continuously falling nickel price on the LME, with the
three-month contract ending the official session at $17,225 per
tonne ($7.81 per pound) Thursday, up 0.9 percent from $17,075
per tonne a day earlier but 3.8 percent below the $17,910 per
tonne level seen at the start of April.
"I cant imagine the price
will go any lower, although I said that when the price was $1
(per pound) higher," according to a third trader.
The price fall comes as Chinese
nickel pig iron (NPI) producers, whose output costs of around
$18,000 per tonne have been cited as a natural floor for nickel
prices, are also benefitting from lower LME tags.
"The nickel ore price is falling
in conjunction with the LME price, which is lowering their (NPI
producers) costs," the analyst said, adding that while
some producers might have already shut down due to low prices,
demand hasnt been robust enough to force stainless mills
to buy virgin nickel and drive prices higher.
A recent export ban on nickel
ore from Indonesia might provide some upside in the second half
of the year, but the pricing picture looks grim in the short