NAS details basis for April nickel surcharge

North American Stainless (NAS) will define the nickel portion of the April 2022 surcharge for its stainless products using only London Metal Exchange official closing prices from February 21-March 18, the company said on Friday, March 18, noting that days that included disruption events will be omitted.

NAS took the action because all the interruptions in the nickel market pose problems for the stainless steel supply chain, “given [LME nickel pricing] is the mechanism used for price guidance of alloy surcharges,” it said.

“The days of trading that included disruption events and days in which the LME were closed will not be used in the calculation of the LME nickel average for the pricing period,” NAS said. “This move is essential to provide the stainless steel supply chain clear direction on April pricing, and to protect the integrity of our industry until the situation normalizes.”

NAS posted a table with its notice that listed, by day, the market turbulence that began with a disruption on March 8, the closing of the LME on March 9, 10, 12, 14 and 15 and further disruptions on March 16, 17 and 18.

The LME also declared a fourth consecutive “disruption event” on March 21. With prices reaching their daily limit on both LMEselect and during ring trading sessions, official prices “will be published but should not be used for over-the-counter deals,” the LME said.

While the market has been in absolute disarray, there is perhaps “a silver lining” in the market approaching trading prices that prevailed before the short squeeze, a nickel market observer said on Monday.

A buyer offered a similar view on Monday. “I suspect that we might actually see some real trades [on March 22] as we will finally be well below $30,000 [per tonne] as [Monday’s] 15% limit would work out... to be below $27,000 [per tonne]. But I do suspect that physical dealers will be a bit gun shy too.”

The historic surge, the largest ever on the LME, began on March 7 due to a short squeeze, which market participants said involved Tsingshan Holding Group, one of the world’s largest nickel producers.

When the three-month-nickel price began an overnight surge on March 8 that led briefly to a record price of $101,365 per tonne on March 9, the LME suspended nickel trading and canceled all trades executed on March 8.

Fastmarkets’ latest monthly assessment for stainless steel 304 cold-rolled sheet, fob mill US was $217 per hundredweight ($4,340 per short ton) on March 10, up by 4.33% from $208 per cwt on February 10 and by 5.85% from $205 per cwt on January 10. Prices for 304 are at their highest since August 2008, when they stood at $222.74 per cwt.

The assessment for stainless steel 304L cold-rolled sheet, fob mill US was at $221 per cwt on the same date, up by 4.25% from $212 per cwt on February 10 and by 5.74% from $209 per cwt on January 10. Prices for 304L are at their highest since August 2008, when they stood at $242.74 per cwt.

Fastmarkets’ assessment for stainless steel 316L cold-rolled sheet, fob mill US was at $299 per cwt on March 10, up by 4.18% from $287 per cwt the previous month and by 6.03% from $282 per cwt in January. Prices for 316L are at their highest since October 2008, when they stood at $314.90 per cwt.

Prices for stainless sheet moved higher in tandem with March increases in stainless surcharges, which rose by 8.42-11.71 cents per lb for Type 304 grades and by 11.44-15.21 cents per lb for Type 316 grades.

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