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Stainless scrap driven higher by LME nickel

Keywords: Tags  stainless scrap, scrap prices, buying prices, nickel, LME, London Metal Exchange, Rey Mashayekhi

NEW YORK — Stainless steel scrap prices continued to rise across the austenitic grades this week thanks to steady demand and London Metal Exchange nickel prices that surpassed $16,000 per tonne, market sources said.

AMM’s broker/processor buying prices for Type 316 solids rose to $2,105 to $2,150 per gross ton from $2,060 to $2,105 per ton last week, 304 solids jumped to $1,635 to $1,680 per ton from $1,590 to $1,635 per ton and 304 turnings rose to $1,455 to $1,480 per ton from $1,410 to $1,455 per ton previously.

A revitalized LME nickel contract has maintained its momentum this week, with three-month metal closing the official session March 18 at $16,125 per tonne ($7.31 per pound), up 2.9 percent from $15,675 per tonne ($7.11 per pound) March 11 and breaking $16,000 per tonne for the first time since April 12, 2013.

Dealer and processor sources confirmed higher trading prices for 300-grade stainless scrap, with some bemoaning what they called the LME’s “manipulative” effect on the North American market and others hoping that recent base price increases from stainless mills would translate into better margins.

“I’m beginning to believe that there’s an evil empire behind the nickel price,” one processor source told AMM, expressing frustration with how buying prices had compressed margins. “It’s one of the most horribly manipulative metals. I used to think it was aluminum.”

“The price is a global price, not a North American price,” the source added. “The fact is that LME stocks have never been higher. (The material) is there, but you can’t have it because it’s tied up in a warehouse financing deal. (Financiers) have artificially made the market tight when there’s no tightness.”

The Indonesian ore ban and better demand from the stainless steel sector have been pushing up nickel prices, but some say that the high prices have been triggered by tensions between Ukraine and Russia rather than purely fundamental factors.

“There is a fairly remote possibility that the political situation will affect nickel, unless things really escalate, but it seems to have livened things up a bit more than the slow-burning situation with the Indonesian ore ban,” a producer source told AMM sister publication Metal Bulletin.

But others pointed to technical buying as the cause of nickel’s push to an 11-month high. “It is just because of a technical break over $16,000,” an analyst told Metal Bulletin.

If stainless steel price increases announced by the four major North American mills stick (, March 17), they “should allow the mills to be able to pay more for scrap. But we don’t know that it will stick,” a second processor source told AMM.

“The best thing in the world for everybody in the stainless business would be for the stainless steel producers to make some profits,” the processor continued. “And that hasn’t been possible. Hopefully the market will be robust enough where they will start being able to make black numbers.”

Chloe Smith, London, contributed to this story.

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