Stainless Steel Prices and Nickel News, Prices, LME Nickel Price, Stainless Steel News – Molybdenum – World Metal Pricing and Market Conditions

  Canadian-owned mining sector becoming endangered species – “If U.S. aluminum giant Alcoa succeeds in its hostile takeover bid for iconic Canadian metals giant Alcan Inc., few publicly traded Canadian base- metals companies with international presence will remain on Canada’s main stock exchange.” – article here

  Iron ore news -Australia – “It’s official: $1.2bn deal makes Twiggy the third force in iron ore” – (article here) – India – “Steel bodies want cap on iron ore exports at 90 mt/yr” – (article here) – Australia – “The remarkable rise of a paper billionaire” – (article here)

  (comment – we are not the conspiracy types, but this bubble article is now appearing as ‘new’ for the third week in a row.) Metals could be bubbling – “Copper, nickel and lead, the best performing commodities in the past four months, may be the worst by year-end.” – re-published here

  (for our invester readers) Preaching to the choir – “Commentary: Hire an adviser to make you money, not to make you feel good” – more here

  NMA Mining Weekly – pdf here

   China raises interest rates, bank reserve requirments – “China will raise the one-year deposit and loan interest rates by 0.27 and 0.18 percentage points, respectively, to 3.06 and 6.57 percent as of May 19, the central bank of China announced on Friday.” – more here

  More News Bites – ” Taiwan’ s Stainless Steel Prices may Keep High in Q2 & Q3 (this author deserves a raise for stating the obvious)” – “China is likely to replace the United States as the world’s third most popular tourism destination next year, a United Nations World Tourism Organization (UNWTO) official said. At present, China ranks fourth, after France, Spain and the United States. (why not – they take everything else!) – Jinchuan about stainless conditions -“Downstream industries which have reacted too high nickel prices, have been, and are being hastened to stimulate and accelerate the alternatives, for the damage will be incalculable….the frequent increase in stainless steel prices…harmful to the stability of the market…” (we have called them on this type of threat before, but evidence is growing the threats have become reality) – “It is reported that China will hold the yearly steel talks with US, EU, Japan and South Korea in early June 2007 in the hope of easing tight trade relations resulting from booming steel export.”

  How to (still) get rich in mining – “So you want to get ahead in mining? True, it might seem like you’re late to the party. No doubt you watched, dismayed, as all those long-suffering investors of Falconbridge Ltd. and Inco Ltd. (yes, the same ones you thought were chumps) doubled their fortunes in the span of mere months, thanks to last year’s installment of the Great Canadian Mining Sale. You can’t believe you sold your Alcan Inc. shares after the CEO said the company wasn’t up for sale, only to see the stock catch fire following a hostile bid from Alcoa Inc. You’ve lost track of how many times you’ve heard that rich foreigners are gutting Corporate Canada, and that our precious natural resources are little more than chum for the sharks from Brazil, or the United States, or even Switzerland.” – article here

  News Bites – “Brazil’s CVRD is unlikely to launch an offer to acquire Anglo-Australian miner Rio Tinto in the short term, Pedro Galdi, an investment analyst with ABN Amro Corretora, told BNamericas.” – “Kawasaki Heavy Industries Ltd. will soon mass-produce a prototype nickel-hydrogen storage battery that can be used as a power source for light rail transit or to help maintain stable output from wind-power and solar-power generators.” –  “U.S. imports of stainless and specialty steel products in the first two months of the year increased 15 percent from the same period a year ago, according to the Specialty Steel Industry of North America (SSINA), a Washington-based trade association.” –

  QuantumDirect Commodities Insight – pdf here

  Institute of Scrap Recycling Industries, Inc.- Market Report – pdf here

  ScotiaMocatta Metal Matters – pdf here

  Week in Review – (sources used different than daily) While it was the third week of May, it was the first full week of trading with all worldwide players working all five days. Monday saw 3 month nickel trading open at $22.86/lb, reach a high of $22.95/lb, a low of $22.20/lb, and ended its first day at $22.34/lb. Tuesday, markets opened at $23.02/lb, reach a high of $23.09/lb, fall to a low of $22.65/lb, and end near its low point at $22.66/lb. Wednesday, the markets opened at $22.45/lb, reached $23.22/lb, fell to $22.29/lb, and ended at $23.08/lb. Thursday the markets slumped after opening at its high point for the day at $22.70/lb, falling to $21.85/lb, and recovering to end at $22.16/lb. Friday was the reversal of Thursday, with markets opening at $22.07/lb, reaching a high of $23.05/lb, a low of $21.77/lb, and ending the day at $22.93/lb. When the dust finally settled, the market had actually lost a little from last Friday’ end of $23.02/lb. While it never reached last Wednesday’s record of $23.50/lb, Friday’s low of $21.77/lb was the lowest the market had fallen since May 1st, when it fell to $21.64/lb. Prices end the week 51.85% higher than they started the year.   

  Opinion – In April 2004, then WMC Resources CEO Andrew Michelmore, advised company investors at an annual meeting, that the market could not sustain nickel prices above $6/lb for much longer, or the high costs could have a long term negative impact on the industry. While Mr Michelmore’s warning has proven erroneous, it would be wise not to completely dismiss his concern. The market has seen the average price for nickel go from $2.70/lb in 2001, to $4.38/lb in 2003, to $6.69/lb in 2005, to $11.01/lb last year, to double that the last few months. For those producing nickel, there remains a mad scramble to find and produce as much as possible. This isn’t motivated out of the goodness of their hearts, but the realism of business, and the financial bonanza available for those who can sell their product while the market is forced to pay such a high premium.

With 2/3 of nickel going to stainless steel producers, those who mine nickel, pay close attention to the reaction of this important customer base. While investors demand the highest return possible on their investment, the mining company, who will be in business long after the shareholder has taken their profits and bailed, must look at business thru binoculars, instead of a shareholder’s microscope. The economic revolution in China, the likes of which has never been witnessed in human history, has been the primary cause for the incredible price increases. This sudden shift, from a fairly predictable trend of supply and demand, established over years of statistics, to one of such dramatic extremes, has forced the industry to scramble to find its way. Amongst this chaos, those who can produce nickel, and even those who hope too someday, have reaped the financial bonanza. On the other hand, the users of nickel, have been forced to endure the negative effects of the supply and demand spectrum, with no immediate relief in sight.

The situation has forced stainless steel users and producers worldwide to look at their options. Not yet a century old, the numerous years it has taken to convince a hesitant market of its higher priced economic value, is now being tested. While the substitution warnings of the past could best be described as idle threats, the extreme nature of the price increases in nickel witnessed by the market since last fall, have left many with no alternative. Even those who scoffed at these options last year, have grown silent, as the situation worsens. The stainless steel industry as a whole, suddenly in jeopardy of losing a hard fought for market share, is being forced to redefine itself. China, the largest consumer of nickel, and largest producer of stainless, is pursuing two primary paths. First, it has sought alternative sources of nickel, importing low content ore that for years has been discarded in stockpiles as too uneconomical to process. Second, it has begun to push alternative grades of stainless steel containing less nickel. The list of both grows larger by the week.

Old beliefs are being questioned and market alliances are under sudden strain. The scrap industry, a major source of recycled nickel to stainless producers, fears the lower nickel 200 series stainless will contaminate their recycling system, as its non-magnetism will make it nearly impossible to distinguish from the nickel containing 300 series. Distributors of stainless steel have been reluctant to add another grade to already expensive inventories, and the financial risk involved with introducing a new line to reluctant customers. There are also concerns about availability, with some producers equally reluctant. Users of stainless steel and their engineers find the price difference appealing, but the lack of a track record, puts many in the position of waiting to see what their competitor does. Now there is growing evidence that some of the competitor’s are starting to switch, and the risk that Mr Michelmore warned of years ago, could snowball into the reality nickel producers fear. Nothing could be worse for the nickel industry than to see demand begin to wain, just as future sources of supply are on the horizon.    

Anyone familiar with the corrosion resistance abilities of 300 series stainless, must acknowledge that there is a market for 200 series stainless steel. The proponents for this metal, largely ignored for years, have suddenly found an audience. Allegheny Ludlum, which has produced the grade for years, is so confident of the market potential it has recently trademarked the phrase “The Switch Is On™” for marketing purposes. Allegheny CEO Patrick Hassey, told Maria Guzzo of American Metal Market , that “It’s doing nothing but gaining traction and growing. We’ve more than doubled our shipments in the first quarter (versus 2006).” According to the AMM article, North American Stainless has recently added 200 series to its product line, and ThyssenKrupp AG is considering it. Depending on which report you read, 200 series accounts for about 10% of world stainless consumption. Few would dispute that share is on the rise, and cutting into the 65% share currently held by 300 series, especially in the Asian market.

With evidence mounting that the nickel industry could potentially be biting off their nose to spite their face, will it matter? Doubtfully. Stockholders, even those who invest long term, hold the option to pull their financial investment at anytime they see the risk growing. Unconcerned about the long term picture, they want the price of nickel to go higher, and their company to sell more…now. Commodity managers, fund managers, and those controlling billions upon billions of dollars for mostly passive and disinterested IRA investors, seem to thrive on the volatility of the market. Except for the commodity managers, they are only here as long as they can make money, whether the market moves up or down. In the real world, nickel producers are mining as much nickel as possible to keep up with current demand requirements. While some may be legitimately concerned that the future market share of their biggest customer base could potentially dwindle, just at a time when new supply becomes available, the growing use of low grade nickel ore, and the loss of some stainless steel in today’s market, may actually add some temporary breathing room. The question remains… at what future cost will this temporary relief come?           

  Ok it’s a little slow in the news department, so here is some sports for the nickel miners out there – “A date with history beckons for Mwana Africa today as the Bindura miners seek to wipe out a one-goal deficit and overcome giants TP Mazembe in a Caf Confederation Cup third round tie at Rufaro….Mwana Africa are still unbeaten at home in the Confederation Cup. The gold and nickel miners have actually conceded only one goal at home so far in the competition…” – here

  And finally – Deep-sea mining can irreversibly damage marine ecosystem – “Undersea habitats supporting rare and potentially valuable organisms are at risk from seafloor mining scheduled to begin within this decade, according to a new study by a University of Toronto Mississauga geologist.” – article here