the Monthly Stainless Metals Index (MMI) stable this month, while the stainless steel market is tight.
Nickel prices seem to have consolidated after the peak in late November. As with other base metals, nickel has started to show a high degree of volatility and uncertainty that would suggest a breakout of the current trading range is imminent.
Multiple bearish indicators, including diminishing buyer volume as well as bearish wedge formations, lead to the likelihood of further price breakouts if nickel prices fail to sustain a bullish break above the high. ‘October.
Indonesia increases its production of stainless steel
As the year draws to a close, Indonesia is on track to overtake India as the world’s second largest producer of stainless steel, according to data released by British research institute MEPS. Production in 2021 is expected to exceed 4.5 million tonnes. COVID-19-related containment measures and oxygen rationing to steelmakers impacted Indian production in the second quarter. Production picked up the pace in the third quarter.
Meanwhile, due to power shortages and production cuts throughout the year, Chinese production has remained limited. Production in South Korea and Japan, however, is expected to increase by 12% and 20%, respectively.
European production is expected to reach 7.06 million tonnes. The US total is expected to rise 16% year-on-year to 2.5 million tonnes. Despite this increase, flat-rolled stainless steel supply in the United States remains limited, with no additional capacity on the horizon.
In total, the forecast for global stainless steel production in 2021 reached 56.8 million tonnes, reflecting an 11.6% year-on-year growth. For 2022, global production is expected to increase by a further 2.5% to 58.2 million tonnes.
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Nickel Mines acquires a majority stake in a project in Indonesia
Following a recent $525 million deal, Nickel Mines of Australia is set to acquire a 70% stake in the Oracle Nickel project. As part of the terms, the company will invest $154 million in construction that will add four lines of electric rotary kiln ovens. Construction will begin no later than February 2023. When complete, the project will have an annual design capacity of 36,000 tonnes per annum of nickel contained in nickel pig iron.
The deal is part of the nickel mine’s broader goals to become one of the top 10 nickel producers in the world. Recently, the company increased its stake in the Angel Nickel project by 30%, bringing its total stake to 80%. This project, also in Indonesia, will start no later than October 2022.
Nickel price at highest in seven years
Nickel prices hit a seven-year high on November 24.
LME three-month nickel prices hit $21,050/t as nickel continued to fall in LME warehouse inventories over the past few months, supporting bullish sentiment. The price surge and subsequent retracement resulted in increased volumes of LME buyers on both the upside and the downside. It is an indicator of market uncertainty as buyers and sellers seek to take control of the direction of the trend.
Meanwhile, as LME inventories fall, imports of refined nickel to China have increased. Imports in the first 10 months of the year were up 96% year-on-year. China’s domestic supply has been constrained throughout 2021 due to multiple factors, including the energy crisis. In addition, a maintenance outage at major producer Jinchuan Group and operator Jilin Jien Nickel’s switch from nickel cathode production to nickel sulphate production heightened tensions in the market.
Real metal prices and trends
The Allegheny Ludlum 304 stainless steel surcharge was unchanged month-over-month at $1.14 per pound on Dec. 1. The Allegheny Ludlum 316 surcharge remained unchanged and held at $1.64 per pound.
Prices for Chinese 316 cold-rolled coil fell 6.56% to $4,412 per metric ton on Dec. 1. Meanwhile, 304 cold-rolled coil fell 12.55% to $3,047 per metric ton. China’s primary nickel rose 3.07% to $23,527 per metric ton.
LME three-month nickel rose 4.22% to $20,125 per metric ton.
Indian primary nickel rose 3.09% to $20.69 per kilogram.
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