NEW YORK Melting-grade
nickel spot premiums have fallen to their lowest level in more
than a decade as an influx of nickel into London Metal
Exchange-approved warehouses in Chicago has exacerbated
concerns over lackluster demand and domestic
melting-grade nickel premiums have dropped to between 15 and 25
cents per pound, down from a narrower 18- to 25-cent-per-pound
range that had previously held unchanged since mid-January. The
current premium range represents the lowest levels recorded
since February 2003, when U.S. spot premiums were as low as 14
cents per pound.
The lower premiums come at a
time when already-languishing consumer demand has fallen even
further, sources said.
"We have less nickel business.
Its 30 to 40 percent lower than last week," a nickel
trader said. "Maybe the demand is lower because of Passover and
"Things seem to have slowed the
last two to three weeks," a second trader agreed. "People have
told us theyre not as busy."
One consumer, who reported
buying spot material this week at a premium of 15 cents per
pound, said that contract business was continuing to cover most
nickel users requirements, meaning spot business is
unlikely to pick up until the second half of 2013.
"With the production rates at
the mills, theyre probably using what they anticipated,
and production hasnt ramped up to a point where
theyre going to need to buy more," he said. "Maybe
thats a reason for premiums being down a little more,
with people getting aggressive to move material."
The lower demand levels have
been reflected in a recent arrival of nickel stocks in
LME-approved warehouses, traditionally considered the market of
More than 1,000 tonnes of nickel
have arrived at Chicago warehouses in recent weeks, reflecting
"oversupply across the board," a third trader noted.
While there was no nickel in
Chicago LME-approved locations as recently as March 14,
deliveries have been mounting for the past two weeks, with
LME-approved warehouses in the Midwest city holding 1,008
tonnes of nickel as of March 26 in addition to Detroits
But now that its in the
warehouses, that metal could take some time to make its way
back out into the physical marketplace, which could help keep
premiums from falling further still, a fourth trader said.
"Its still taking forever
to get metal out of LME warehouses. If anything, thats
propping the premiums up," he said.
premiums were unchanged in a range of 50 to 60 cents per pound
Three-month nickel ended the LMEs official session
March 28 at $16,700 per tonne ($7.58 per pound), down 2.2
percent from $17,080 per tonne ($7.75 per pound) March 14.