Moderate price drop of stainless steel coils expected in October 2018

Following alloy surcharges trend in August and September we do not see a clear price recovery for October. In fact, we expect a final price of the stainless steel coils with an slightly drop. In other hand, ferritic steel grades would remain stable.

Why does the alloy surcharge drop?

The reason stands for the continuing trade dispute between the US and China, which has put all the industrial metals under significant pressure during the last few weeks. The LME, London Metal Exchange, reached a minimum of 13 months in mid-August, which explains why other metals also went down significantly recently (these other metals are not relevant for the Alloy surcharges)

Nickel

The nickel apparently it is not be affected directly by trade wars and reached its lowest level for 7 months in August at $ 12,600. In this way, the industrial metals went back to price levels of beginning of the year, wiping out all the gains of the year.

However, Nickel is still the raw material that shows the best performance of all industrial metals, since all others are in negative since the beginning of the year, except molybdenum.

LME

Commercial disputes between the United States and China apart, there is still a permanent only noise about the battery. The London Metal Exchange plans to open a futures market for sulfates (such as lithium and cobalt sulphate for batteries). This has been announced as strategical path. However, it remains unclear, the scope that this new market will have on the normal price of nickel, or how this will be reflected in the market.

Nickel continues to suffer from a supply deficit. Stock levels in LME have been reduced by a total of 130,000 tonnes since the beginning of the year and currently amount to 237,000 tonnes. In this context, it is interesting to see that the reduction in stock levels has not been reduced during commercial conflicts. This provides evidence that the supply of nickel minerals in China apparently is more than covered.

Conclusion

The price drop in metals over the last few weeks was driven by speculative markets. However, demand continues to be strong without interruption at sight. Our scenario is that metal markets are undervalued in some way. And we maintain our point of view that significant reductions in nickel stock levels should continue to support rising prices this year. And for this reason, we think there will be a slight upward movement of alloy surcharges next November.

Originally published at www.conecband.com.

Disclaimer: The content of this article reflects our view and is not a recommendation to buy or sell any asset. Each buyer must do his own analysis. Although we took all reasonable care in writing this post, it is possible that the information in it is incomplete or incorrect or may differ of what you know.