UNITED KINGDOM November 30 2016 8:29 PM
LONDON (Scrap Register): Stainless steel transaction values climbed significantly during November. MEPS All Products Average figure for grade 304 increased by 3.5 percent, month-on-month. The rise was predominantly due to the mills passing on to their customers their growing raw material costs, most notably for nickel. The metal’s price has been on an upward trend since September, with a sharp spike in the wake of the US presidential election.
Sentiment in the nickel market was positively affected, earlier in the year, by the actions of the Philippines government, closing several mines, on environmental grounds. Following on from Indonesia’s ban on nickel ore exports, this move suggested a likely tightening in supply, in the medium term. Both countries have confirmed, recently, that they will continue with their restrictions for the foreseeable future.
Although LME stocks remain at a comparatively high level, above 360,000 tons, an upturn in demand could lead to a supply deficit, with the consequent upward pressure on prices.
The LME nickel value soared in the immediate aftermath of Donald Trump’s election victory in the United States, as investors favored commodities, such as metals, over stocks and shares. While many observers predicted that Mr. Trump’s election would engender economic chaos, the evidence suggests that his stated growth-friendly plans, such as corporate tax reform, deregulation and infrastructure spending, have been viewed positively by the markets.
In addition to economic growth, US stainless steelmakers are likely to be assisted by further protectionist measures, under the new regime.
Recent trade restraints, by the US, the European Union and others, have primarily targeted exports from China. The world’s biggest stainless steel producer has excess output capacity and more facilities are planned. With restricted access to overseas markets, China’s future strategy will have a major influence on the global supply/demand balance.