Volatile nickel prices reflect the difficult state of the world economy. In early September nickel prices for the year were up more than 75%, but warehouse stocks at the London Metals Exchange were being drawn down. At the start of the year stocks in LME warehouses were 206,000 tonnes. By the end of October stocks will fall to 67.000 tonnes.
Falling stock levels
Normally falling stock levels coincide with rising prices but this has not been the case this year. Subdued global conditions have been the major reason. Opinions vary on the outlook. The International Nickel Study Group expects the supply deficit to reduce from 79,000 tonnes to 47,000 tonnes in 2020.
Macquarie Research on the other hand expects Chinese stainless-steel production to continue to rise. Demand of 30.1 million tonnes is expected in 2020 compared with 29.5 million tonnes in 2019. Under this scenario continued nickel supply deficits and rising nickel demand from Chinese stainless-steel producers could underpin nickel prices and stainless-steel scrap demand in the immediate future.
Forecasts in Europe are less optimistic. The International Stainless Steel Forum (ISSF) measured a first half decline for 2019 of 4.9% for 2019 to less than 3.75 million tonnes.
The ISSF also expects total stainless-steel consumption in Europe/Africa to fall 2.9% in 2019 before rebounding modestly next year. Competition from Asian stainless-steel imports, slowing European manufacturing, political and economic uncertainty has certainly dampened the enthusiasm of early this year.
Above all the disconnect in primary nickel, stainless steel, and stainless-steel scrap prices has complicated current market conditions throughout the world.
Recycal take an active interest in global trends. Our team visit and attend the key major conference and symposiums around the world. This ensures our team understand global trends and can facilitate strategies and thinking that informs how best we service our growing client base.