• NICKEL prices (LME 3-months) moved sideways in May/June. After a price drop in May prices have stabilised in a price range of 18,000-22,000 US$/t. LME Nickel stocks fell continuously from 165 kt in January to ~130 kt in mid June (-20%).
• Primary Nickel supply exceeded demand by ~100 kt in 2009. For 2010, a market balance is expected by market players. INSG forecasts a surplus in a range of 10,000 t for 2010 – whilst other analysts even expect a deficit. Ni demand has exceeded supply in the first months of 2010. It is reported that Ni cathodes will remain short but an end of the Sudbury strike could change this quickly.
• Some pressure has been taken from the Ni market in May/June when scrap availability has improved.
• Rio Tinto plans to invest 470 million US$ in its Kennecott Eagle mine in Michigan. First production is expected for 2013 (~ 17,000 t of nickel concentrates).
• CHROME - No agreement about Charge Chrome contract prices until press time (June 24th): stainless mills plead for falling prices due to falling demand - whilst FeCr suppliers expect a roll-over of the Q2 range of ~1.36 US$/lb based on (again) expected production problems in South Africa as electricity demand exceeds capacity during winter and additional demand from the soccer world championship. Additionally, there is a risk that unions will call a strike at South African electricity supply monopolist Eskom.
• Higher costs at South African suppliers due to higher winter electricity tariffs: FeCr suppliers plan to reduce production from June-August. Xstrata-Merafe intends to work at its smelters on a capacity level of only 65% in the next three months.
• Chinese FeCr smelters have reduced their capacity utilisation to ~60% in June due to declining demand. Electricity costs have been lifted as well in the Hunan Province – which lead to profitability problems at producers with already relatively high production costs.
• MOLYBDENUM – market prices dropped in June due to reduced demand as stainless and alloy steel mills reduced buying in anticipation of a lower production over the summer period and renewed availability of Chinese material.
Read more: Damstahl: Melt shop shut-down in Bochum has been postponed
• China returned to the Mo market as major exporter after several months of absence. China became a net importer in 2009. It is assumed that suppliers kept substantial amounts of material on stock last year. Many Chinese producers have underground mines which are not competitive against Mo by-product producers in Latin America in times of low prices.
• Chilenean producer Molymet expects a further volatile sideways moving Molybdenum price in the second half of this year. According to them, particularly the demand in Europe remains relatively weak
• General Moly (USA) announced to have sold out its initial capacity for the next five years. Major buyers are Posco, ArcelorMittal and Hunlong Group China. The company expects to receive final governmental approvals for its Mount Hope mine in 2011. Production start is planned for late 2012.
Read more: Damstahl: Mill problems will remain an issue in 2014
• STAINLESS STEEL SCRAP – the tightness in the 18/8 scrap market has eased.
• Stainless steel mills have reduced their monthly orders for July and August deliveries.
• Scrap Price: A ‘normalisation’ of discounts on the intrinsic Ni value to a range of 7 – 10% can be expected for Q3. This brings scrap back to be the ‘value option’ amongst all raw materials, which was not the case in Q1 when scrap hit historic high levels (in the U.S. there was even a ‘premium’ paid in some cases).