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Nickel premiums rise on supply, Russia fears

Keywords: Tags  nickel premiums, melting-grade, Norilsk, Russia, London Metal Exchange, LME, Rey Mashayekhi


AUSTIN, Texas — Melting-grade nickel premiums increased this past week as the North American market continued to experience tightness in available material and rising anxiety over the potential supply impact of further sanctions against Russia.

AMM’s melting-grade premium rose to 25 to 33 cents per pound March 26, up from 23 to 30 cents previously, while plating-grade premiums remained in a range of 60 to 70 cents per pound.

Traders and consumers confirmed that upward pressure on premiums in recent weeks has resulted in higher transaction prices for melting-grade material, with briquettes in particularly tight supply. Although London Metal Exchange nickel stocks reached an all-time high of 286,674 tonnes March 26, little of that material is readily available in the North American market, sources said.

There also has been increasing anxiety over the potential consequences of further sanctions by the U.S. government in response to Russia’s move in Crimea, market participants said.

Several U.S. stainless and specialty alloy producers reportedly receive a significant amount of their nickel on a contract basis—up to 70 percent for some, according to multiple sources—from Moscow-based MMC Norilsk Nickel, the world’s largest producer.

Such concerns, coupled with the continuing lack of available material on the spot market and revitalized LME nickel prices, have led to higher transaction premiums.

“There’s (upward) pressure and a lack of material ... on the ground,” one trader told AMM. “We’re finding supply tight—briquettes mainly, and a little on the 4-by-4 (cut cathode) side of things.”

In the spot market, Norilsk is actually sold out. “The producers are all pretty well sold,” he added.

“You saw the nickel price move up to $16,400 (per tonne) on the LME, which was because of the Indonesian export ban and related to Russian sanctions,” a second trader said. “Some of the U.S. mills have got contracts with Norilsk, from whom they take up to 70 percent of their supply. They’re a little bit nervous. I think people are making contingency plans.”

Norilsk could not be reached for comment.


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