Japanese nickel scrap prices fall 30%
PLATTS: Japanese nickel stainless scrap prices plummet by 30% in 3 weeks
Tokyo (Platts): Japanese nickel stainless steel scrap prices have plummeted by 30% in the last three weeks, local industry sources said on Thursday. Spot prices of nickel stainless scrap of 304 grade were quoted at Yen 370-400 ($3-3.2)/kg Thursday by scrap dealers in Tokyo and Nagoya cities, trade and stainless mill sources said.
The prices were down by 30% from the levels around Yen 500-550/kg three weeks ago. Prices have fallen as demand from stainless steel mills slowed after April.
A stainless mill Nisshin Steel started to cut output of cold-rolled stainless sheet products in April, as the company observed excess supply of retailed products. Nippon Steel & Sumikin Stainless Steel has shut its Hikari plant in western Japan for a turnaround in May, which also affected the country's nickel consumption level. Japanese mills use both scrap stainless and primary nickel.
Scrap usage consists around 50% of total nickel consumption at a typical stainless mill in Japan. The slowdown in nickel consumption not only resulted in the falling scrap stainless prices, but premiums for nickel cathode weakened as well. The premiums have fallen by 10-30%.
"The price trends in stainless reflect the reality of nickel supply and demand fundamentals, as unlike the London Metal Exchange nickel, investment funds would have no interest in scrap," said one trader. "Scrap prices are falling every minute...market participants who stocked up materials are trying to sell away in a market with no buyer," the trader said. "Unfortunately, no stainless mill would consider ramping up productions now, so there is just too much nickel in the market," the mill source added.
Meanwhile, some ferrochrome traders also expressed concerns over the melt down of scrap nickel prices. "If stainless steel consumers suspend orders, waiting for nickel prices to fall further in this downtrend, mills will be forced to cut outputs. This will affect ferrochrome prices," said a trader.
Spot high carbon ferrochrome prices are riding high, quoted above $1.20/lb in Europe and levels slightly above $1/lb CIF basis in Japan. "I see ferrochrome prices collapsing, after mills start to cut outputs...the critical zone is LME three-months nickel touching $30,000/mt," a second trader said. London Metal Exchange three-months nickel traded at $40,300-40,500/mt as of 0800 GMT Thursday, after sliding down to $38,000/mt earlier.