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Spot off grade nickel supply is tightening as raw materials prices increase and premiums for class-one nickel rise, consumers told Metal Bulletin.
For most of last year, consumers were able to largely avoid London Metal Exchange-deliverable material to cut purchasing costs and they enjoyed wide discounts for nickel units in stainless steel scrap.
But Indonesia’s ore export ban, which is boosting prices for ore and nickel pig iron, has coincided with increased demand for nickel from stainless steel mills as melt rates improve.
Scrap discounts, which widened to historic levels in 2013, are narrowing again, as are discounts for ferro-nickel.
Nickel consumers say it is more difficult to source spot off grade nickel as much of the supply is tied up in long term contracts.
“Earlier this year consumer switched from off grade; a lot of it is already sold in long term contracts so there’s no material on spot,” one European mill source told Metal Bulletin.
“So we’re having to buy LME-grade briquettes and full plate again,” the source added.
And price rises seen for higher quality products have filtered down, a trader said.
“A lot of consumers switched to – let’s say – class two products. Now the market has gone up and prices have risen in that market too and material is tight all of a sudden,” the trader told Metal Bulletin.
Premiums for LME-deliverable briquettes, which were under the most pressure last year, have seen the steepest increase. Metal Bulletin’s daily premium indicator rose to $132.08 per tonne on Tuesday March 12.
Briquette premiums were reported in a range of $20-300 per tonne, compared with $20-100 per tonne in mid-January. Reported premiums were scattered fairly evenly across the full range.
“We’ve seen a considerable increase in premiums, especially for briquettes and the main reason is better demand from stainless mills. Discounts for ferro-nickel have been significantly reduced,” a buyer at a second mill told Metal Bulletin.
“It’s more difficult to buy off-grade material in the spot market than it was two or three months ago but I don’t see a shortage,” the source added.
Premiums for 4×4 cathodes are at $100-300 per tonne, compared with $100-225 per tonne previously. They are being most commonly reported above $200 per tonne.
Full plate premiums were reported at $0-120 per tonne, compared with $0-100 per tonne previously. They are being most commonly reported at $30 per tonne or $50 per tonne.
Three-month nickel settled at an official price of $15,700/05 per tonne on the LME on Tuesday.
Janie Davies jdavies@metalbulletin.com Twitter: @janiedavies_mb