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LME nickel stocks hit new record high

Keywords: Tags  nickel, nickel premiums, LME, London Metal Exchange, LME nickel stocks, LME warehouses, Rey Mashayekhi

NEW YORK — Spot nickel premiums were unchanged Nov. 6, but some market participants forecast an upturn due to a dwindling supply of available material and low prices as stocks in London Metal Exchange-listed warehouses reached another record high.

AMM’s melting-grade premium held at 15 to 25 cents per pound Nov. 6, while the plating-grade premium remained at 50 to 60 cents per pound.

LME nickel stocks reached an all-time record high of 240,408 tonnes Nov. 6. At the same time, the LME’s three-month nickel contract declined to $14,060 per tonne ($6.38 per pound), a 4.6-percent decrease from the two-month high of $14,745 per tonne ($6.69 per pound) reached Oct. 22.

While some traders said they were seeing a quiet market lulled by low demand and underutilization of capacity at stainless mills, other participants said that the amount of metal locked up in U.S.-based warehouses could have reached a level where premiums could rise due to the resulting tightness on the ground.

"Spot nickel got tight," one market source said, blaming the tightness on a lack of available spot nickel in North America. "I see premiums going up in the short term. A lot of companies cut production, people drove their inventories down to zero, business picked up a little bit, and then nobody had any nickel."

Still, one trader source cited downward pressure on premiums, mentioning that he had "lost business at 15 (cents)."

However, a second trader said he "(didn’t) know anyone who’s going to sell below 15 cents" per pound.

"I would not be able to offer at 15 (cents); I wouldn’t make any money," he said. "I personally don’t see any downward pressure on that."

Market participants also noted that the industry was beginning to enter long-term contract negotiations, with consumers "busy looking at 2014 volumes and business."

One market source familiar with such discussions said consumers "are looking for improvements from last year’s terms, but producers are holding out to repeat the terms."

"People are cautiously optimistic that 2014 is going to be better than 2013," another market source said. "But overall, they’re still cautious."

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