Like any commodity, the price of nickel fluctuates according to current supply and demand – and expected changes to supply and demand over the coming months. August and September 2019 saw a huge spike in global nickel prices, following six months of steadily rising prices. In this article we look at how prices have changed from the previous quarter (Q3/July to September 2019) to the current one (Q4/October to December 2019).
Q3 Price Spike
The commodity market for base metals was buoyant in Q3, with average price rises of 2.7%, despite continued uncertainty arising from the US-China trade dispute. This was largely due to an unprecedented 36.7% leap in global nickel prices over the quarter, stimulated by the Indonesian government’s announcement that their ban on nickel ore exports would be brought forward by two years – coming into force on 1st January 2020. (Other base metals, including aluminium, iron, zinc, tin and copper, saw a reduction in value over Q3.) This bought nickel prices to a five-year high as the quarter ended in September 2019.
The Outlook For Q4 2019
The spike in nickel prices shows no sign of slowing down in October 2019. The cash value of nickel on the London Metal Exchange (LME) was US $17,405 per metric tonne on 14th October, up from just over $11,000 in June 2019.
The reason behind the Q3/Q4 price spike is clear. Stainless steel producers are expecting a global shortage of nickel ore after the Indonesian ban comes into effect and are stockpiling raw materials in preparation for this.
This suggests that we should expect further increases in Q4 as panic buying continues, and more price records are likely to be broken before the end of the year. As the ban impacts global nickel supplies, prices are set to remain high in 2020, although the rate of increase will eventually plateau.
Long Term Implications
Overall, raw material – including scrap – prices are likely to increase. Unless the ban is repealed, these higher commodity prices will become the new norm.
If you work with nickel alloys, or expect to in the near future, we recommend sourcing your requirements today before prices climb further.
However, good news for nickel prospectors and miners: outside of Indonesia, the Philippines, Canada, Australia and Russia also have large nickel deposits. These producers will be under renewed pressure to increase extraction volumes from existing mines and uncover new mineral streams. If they are successful in this, it may eventually increase the global supply of nickel and lower prices.
At Broder Metals Group, we work with a wide range of nickel alloy producers to provide competitive prices on all grades. We are currently seeing high demand and record sales and hope to maintain this with new stock arriving on a monthly basis. One way of guaranteeing we meet our customers’ demands is by entering into stocking agreements/call-off orders with them. To discuss your requirements in person, please call our sales team on +44 (0) 114 232 9240.
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