NEW YORK Spot nickel trading remains light despite an ongoing lull in nickel prices and premiums, with an abundance of nickel and stainless scrap keeping significant consumer interest at bay.
Melting-grade nickel premiums are steady in a range of 15 to 25 cents per pound, while plating-grade premiums remain at 50 to 60 cents per pound.
The London Metal Exchange three-month nickel contract closed the official session July 17 at $13,950 per tonne ($6.33 per pound), up 2.5 percent from $13,605 per tonne ($6.17 per pound) July 5. The contract recently dipped toward the $6-per-pound mark, closing the July 9 official session at $13,245 per tonne ($6.01 per pound), although traders said it had failed to spur a boost in spot purchasing.
"The spot market is nonexistent. Even with the low numbers, consumers are still sitting on the sidelines. They have enough units covered under long-term contracts, so theres no need to go into the spot market," one trader said. "Weve seen the market bounce up today, so maybe that initiates some consumer interest where people think Id better jump in before I miss the boat (on low prices)."
"At the end of the day, they just dont need it at any price," a producer source said. "There are a lot of individuals talking about buying a truckload and putting it in a warehouse, but not everybody has the cash."
Some 1,410 tonnes of nickel were stored in LME-registered warehouses in Chicago and Detroit as of July 15.
"Theres no business, and you have a lot of stocks on the LME. People have to keep making production cuts because theres still too much nickel out there," the producer source said. "We still havent heard of any single-digit premiums yet, but a lot of companies are probably losing money on the nickel that theyre selling."
A second trader said that nickel purchases by the stainless steel industry also are being stymied by the availability of "cheap and abundant" stainless scrap. Consumer buying prices for Type 304 solids recently fell to their lowest levels since June 2009 (amm.com, July 11).
"If the scrap was hard to find, Im sure spot nickel would be more in demand," he said. "If youre a stainless producer looking to make money off the nickel price drop, youre having a hard time because your customers are waiting to buy off the lower surcharge. Four days from now youll know you can buy stainless steel with nickel price down 5 percent from last month."