Nickel
Strong price rally as stock levels largely maintained
November 2017
The LME price rose strongly over October to finish the month at over US$5.50/lb. LME stocks remain stable while SHFE stocks continue to decline. Chinese port stocks continue to grow as Indonesia increases ore export permits.

The October LME nickel price averaged US$11,336/t (US$5.14/lb), up 1% on the September average. Over the month, the nickel price ranged from US$10,304/t (US$4.67/lb) at the start of the period, rising to US$12,256/t (US$5.56/lb) by the end of October. The nickel price has steadily increased since reaching a mid-June low of US$8,739/t (US$3.96/lb). This improvement may be attributed to positive market sentiment as nickel’s future demand from electric vehicles comes under the spotlight, however AME cautions that current price levels will incentivise the reactivation of idled NPI capacity not covered by winter environmental bans in northern China.

Over October, combined exchange stocks (LME and SHFE) dropped by only 4.4kt to 430.6kt, compared to a 17.3kt reduction in September to 435kt, with reductions in stock levels seen in both LME and the SHFE warehouses. LME stocks rose then fell by 3.5kt over the month to finish essentially unchanged at 381.9kt, with falls on the SHFE responsible for the 4.4kt reduction in exchange stocks. SHFE deliverable stocks now sit at 48.7kt, down from a peak of 112.1kt in September of last year.

Imported nickel laterite ore stocks stored in Chinese ports rose 5%, or 0.55Mt over October to reach 10.7Mt. However, medium to high-grade stocks actually lifted by 0.73Mt to 7.45Mt, an 11% increase, while low-grade stocks fell by 5% to 3.27Mt. This reflects the flow of higher grade Indonesian ore now reaching China following relaxation of the ore export ban, and continued Chinese demand for low-grade ore for 200 series stainless steel production. Medium to high-grade ore now makes up 69% of China’s physical port stocks, after reaching a low of around 58% in May before significant volumes of Indonesian ore began delivery, and as Philippine shipments were still rebounding from the wet season. AME estimates that Chinese port stocks currently hold around 98kt of contained nickel, up from an estimated low of 74kt in May.