We shouldn’t be complacent about low Nickel and Stainless Steel prices, which may be short-term.
Looking forward, there remains a potential deficit in Nickel supply-demand balance.
High stocks of Nickel at the London Metal Exchange (LME) have held down the Nickel price, coupled with low demand from Stainless mills, as they manage summer stock levels and reduced demand in China. However, global growth in Stainless Steel consumption is predicted still at 4-5% p.a. for 2015-2016-2017.
Since early 2014, nine Chinese Stainless Steel producers have exited the market (800kt production at peak) and further consolidation is probable. Nickel pig-iron producers have closed capacity due to price pressures, as supplies of imported ore have reduced.
The recent sharp fall in Chinese equity prices weakened Nickel and other commodities due to negative economic sentiment and margin calls. However, the government have taken unorthodox steps to support equity prices and it is reported also that the China State Reserve Bureau is buying Nickel.
China accounts for 43% of Global industrial metals consumption and 50% of Global refined Nickel, so hence the impact on supply-demand balance and prices.