Nickel tumbled to new three-month low on eased supply concerns, weaker demand

SHANGHAI, Nov 18 (SMM) – Shanghai nickel prices tumbled more than 3% to the lowest in more than three months in early morning trade on Monday November 18, as supply concerns eased while worries about demand intensified on falling stainless steel prices.

The most active nickel contract on the Shanghai Futures Exchange for February delivery plunged to 115,020 yuan/mt, its lowest since August 5, before Indonesia confirmed in September it would expedite a ban on nickel ore exports to the start of 2020, while the three-month contract on the London Metal Exchange slipped to its weakest since August 7 at $14,660/mt.

Prices for the metal used to make stainless steel have been on the decline since the start of November, reversing gains from Indonesia’s temporary suspension of nickel ore shipments at the end of October due to export rules violations. It was reported that nine companies had been allowed to resume nickel ore exports until the end of the year.

The world’s top nickel supplier’s nickel revenues rose sharply by Rp1.1 trillion in October, “even twice as much as exports in 2018,” said Heru Pambudi, director-general of Indonesian customs. Revenues in this sector only reached Rp659 billion during 2018 exports.

Nickel stocks in Shanghai, including SHFE warrants, rose 4.8% or 3,746 mt, to 81,400 mt last week, showed SMM data, while stocks across LME-approved warehouses stood at 64,566 mt as of November 15.

Prices of stainless steel, meanwhile, continued to fall as demand weakened in a low season and supply pressure spread from producers to the spot market.

Prices of hot-rolled 304 stainless steel dropped 400 yuan/mt last week, while those for cold-rolled materials fell 200 yuan/mt.   

In terms of 300-series, integrated nickel pig iron and stainless steel plants are running on the verge of losses, while those plants who buy ferronickel to produce stainless steel see a loss of 600-700 yuan/mt, showed SMM calculations.