The official three-month LME Nickel contract on June 30 settled at $18,440/mt, up by $2,392/mt from April 1. The contract registered a drop to $15,670 levels in March after the Tsingshan Holding Group’s deal with two Chinese battery makers and Nornickel’s announced production cuts, among other reasons.
Over the three months, nickel prices have gained momentum and have reached $18,487/mt levels, while demand and optimism continue to grow for the metal.
Demand for electric vehicles will support nickel prices in the long run, with global economies shifting towards sustainable development by cutting CO2 emissions. Demand for nickel and copper will grow sharply in the coming years amid the focus on the renewable energy sector.
Sumitomo Metals and Mining has recently forecast nickel demand for batteries to increase by 18pc to 228,000mt in 2021, compared to 193,000 in 2020. Nickel demand in 2021 could rise by 9.2pc to 2.58mn mt, and supply would be up by 5pc to 2.63mn mt in the year.
LME nickel stocks have fallen by over 30,000mt in the last two months, which has supported prices as demand continues to grow, not just from the stainless steel sector, but also for lithium-ion batteries. Towards the end of June, LME warehouse stocks were at 233,814mt, after falling by 13,680mt in June.
Stainless steel scrap prices on a cfr India port basis have jumped in line with the trend in LME. SS grades 304 and 316 have, in the three months have jumped 11-12pc or rose by $200-253/mt. Offers for imported SS 304 (18-8) solids kept increasing over the three months to around $1,850/mt cfr India port levels, up by $204 from early April. The Davis Index for 316 solids settled at $2,470/mt cfr India port on June 28, up b $253/mt in three months.
Demand from Indian mills was, however, low amid the lockdown restrictions and shortage of oxygen. Some large-scale mills continued to produce at optimum capacities, while others had to cut production. Small scale mills suffered the most in the lockdown which began at March-end and continued till May. Demand for scrap thus declined in the June quarter.
In the export market, however, demand for stainless steel kept growing, supporting scrap prices. With the lockdown now eased in India, the industry could see a revival.