Quarterly Report – September 2020

In common with many commodities, the nickel market appears to be returning to normal. 

From a price in July of approximately US$ 13,500 per tonne, it improved to above US$ 15,800 before giving up some of the gains to arrive at US$ 15,200. Nickel demand for the stainless steel market is still expected to suffer a small contraction this year, which will be the first in a decade. For the EV sector, demand for nickel is thought likely to be similar to last year as people have continued to buy electric vehicles.

In the third quarter of 2020, Taiwanese and South Korean mills’ demand for scrap has been stable, and demand in the fourth quarter should be similar and no cause for excitement. The risks are now high, however, as nickel is above its normal average of the last 10 years. Customs statistics show that Indonesia Stainless hot coils and products are claiming an approximately 36% share of Taiwan’s stainless coils market.

Stainless scrap demand has been strong in China where the V-shaped economic recovery is translating into improved order levels for stainless steel products, with the result that domestic raw material prices are climbing. Indonesia’s nickel ore export ban is still in force and so mills are requiring more stainless scrap.

Japan’s stainless demand has remained weak in the third quarter. All mills are now back online after the COVID-19 lockdown and expectations for the fourth quarter put demand on a much more stable footing.

The virus situation in India has continued to worsen, with a high number of positive cases. GDP has been dipping and much concern has been expressed for the overall health of the economy. Demand for stainless steel scrap has been rather strong for all grades in September and the volumes generated by local industry seem to be falling, thereby forcing mills to look towards scrap imports. Ferro-nickel is also becoming hard to source, thus putting pressure on stainless scrap. Even the 200 series and chrome steel have shown signs of increased demand. The overall demand outlook for the fourth quarter looks to be positive.

While the low has been passed, it is not clear whether the high point of the current cycle has yet been reached. With the US election coming soon, the market could adopt a cautious approach.