Nickel prices are nearing a seven-year high and SS scrap prices are rising in tandem. Supply threats for copper continue to support its prices. Riding on these gains, India’s metal scrap market is upbeat supported by a gradual rise in end-user demand.
Stainless steel demand in India is expected to increase in the coming months ahead of the festive season. With the easing of COVID-19 restrictions in many states, market participants have reported a gradual return of demand. An improvement in the auto sector could play a major role in lifting demand for SS and other metals consumed by the auto sector.
Globally, a surge in demand from the SS sector, a major consumer of nickel, and the expansion in the electric vehicle (EV) segment kept nickel prices elevated. Rising demand outpaced concerns on the macro level. The LME nickel inventories fell to 217,878mt on July 27, down by over 17pc since mid-April, according to Yash Sawant, Research Associate, Angel Broking.
Further on, nickel prices were supported by Tesla striking a deal with BHP group to ensure an undisrupted supply of nickel. Nickel supplies are vital for producing high-powered batteries used in electric cars. The market expects a sustained economic recovery and booming demand for nickel as electric vehicles become more popular in the coming years.
MCX nickel prices are up about 10pc in July, whilst LME nickel prices rose about 7pc. Nickel prices continue to rally despite mounting worries over the Delta variant of the COVID-19 virus, besides Chinese attempts to ease commodity prices.
On the same note, to cater to rising SS demand, India’s Jindal Stainless will be doubling its melting capacity to 2.10mn mt by December 2022.
Although SS market sentiments remain positive, high scrap prices act as a hindrance for the small-scale SS mills which suffered losses during the lockdown. Amid tight liquidity conditions, higher input costs, especially raw material prices will eventually be pushed on the end-users, opined industry sources.
Nickel prices are nearing a seven-year high and SS scrap prices are rising in tandem. The official three-month LME nickel on July 28 settled at $19,600/mt. The most-traded stainless-steel scrap, SS 304 (18-8) has jumped to almost $2,080/mt levels cfr India port, while offers on Tuesday reached $2,100/mt levels.
Markets in India have started to improve and mills actively procured scrap until mid-July. But last week, mills resisted higher offers. Despite buyers’ resistance, scrap prices will continue to rise in the coming weeks due to short supply of scrap, said market participants. Offers for SS 316 solids have hit $3,000/mt cfr India port levels in the last week of July, up from $2,300/mt levels heard towards the end of June.
The Davis Index for 304 (18-8) solids on Tuesday settled at $2,068/mt cfr India port and the index for 316 solids settled at $2,929/mt cfr India port, impacted by low bids from mills. The gap between bid and offers widened on Tuesday.
Supply threats for copper
Markets kept a keen eye on the labour contract negotiations at Chile’s Escondida Mine, the world’s largest copper reserve, which has been going on for a couple of months. The worker’s union has received a “final offer” from operator BHP.
Speaking on copper prices Yash Sawant said worries over a potential strike or halt in operations at the world’s largest copper deposit would further hamper the copper supply chain and send prices higher. Further disrupting the copper supply chain were the road blockades at Peru’s Las Bambas mine (annual capacity of 400,000mt of copper). The blockade commenced on July 23 as the protestors demanded greater benefits for the usage of natural resources.