Quarterly Report – September/October 2019

The ongoing trade war between China and the USA is impacting commodity pricing on a weekly basis while Brexit delays are prolonging the uncertainty in the Eurozone.

Nickel reached its highest level for five years in early September 2019 on news that the world’s largest nickel-producing nation Indonesia will be banning exports from January 2020. The LME cash average of US$ 13,470 per tonne for July 2019 has been eclipsed by the average for September to date of US$ 17,850. The nickel cash average for the third quarter as a whole (up to September 17) was US$ 15,250 per tonne.

Other than this blip for the commodity, there has been weakening demand from Europe’s stainless steel manufacturers and an extremely low nickel valuation in scrap. Superalloy demand seems steady in the third quarter even with the International Monetary Fund reporting global growth as “sluggish”.

Meanwhile, Glencore has announced the mothballing of its largest cobalt mine Mutanda, which is responsible for around 45% of DRC cobalt, citing low cobalt pricing as a factor in the mine being currently unviable. This stemmed the decline in cobalt pricing, which has been falling since the highs of last year’s second quarter and caused a tightening of supply in the third quarter of 2019.  

The LME cash average for cobalt climbed from US$ 26,360 per tonne for July this year to US$ 35,045 for September; for the third quarter up to September 17, the cash average was US$ 29,110 per tonne. Analysts are forecasting an improvement in cobalt pricing in the medium and longer term.

No major improvement in the current uncertain situation is anticipated for the fourth quarter, and thus we are hoping for a stabilization in the first quarter of 2020.

Uwe Dierkes - Uwe Dierkes (Superalloys)

Uwe Dierkes

Siegfried Jacob Metallwerke GmbH & Co KG (DEU)

Quarterly Report – September/October 2019