Nickel June 2017
Prices Fall to 11-Month Low

The April LME average nickel declined a further 5.13% despite falling stockpiles. Exchange stocks have continued to fall, led by declines on the SHFE. The drawdown of Chinese port stocks of nickel laterite ore stabilised in May, with a rebound expected in coming months.

The LME nickel price for May averaged US$9,155/t (US$4.15/lb), down 4.7% on April. LME prices have continued decline since January. The price of US$8,922/t (US$4.05/lb) reached at the end of May was the lowest LME price seen since June last year. At this price AME estimates two thirds of finished nickel producers operate at a loss based on expected 2017 cash costs.

Combined exchange stocks (LME and SHFE) opened the month at 464kt and finished the month 1.1% down despite a sudden 6.4kt increase in LME inventories late in the month. Due to this spike, LME inventories finished the month only 0.7kt down, while SHFE stock levels declined by 4.5kt over the month to finish at 79.8kt, with the entire SHFE stock decline occurring in the second half of May. SHFE stocks have now been in constant decline since September of last year.

The drawdown in Chinese port stockpiles of nickel laterite ore stabilised in May, remaining around 8.5Mwmt as deliveries started to flow from the Philippines following the abatement of the rainy season, and as the first deliveries of nickel laterite ore since the start of 2014 began to arrive following the relaxation of the Indonesian ore export ban. Stockpiles of medium to high-grade ore increased 3.3% to 5.24Mwmt, while low-grade stocks decreased by 7.7% to 3.24Mwmt. AME estimates that contained nickel in port stocks over the month remained stable at around 75kt. AME expects stocks will rise in June, as Philippine producers unaffected by recent government closures and suspensions ramp-up production into the dry season, and as suspended operations continue to ship stockpiles and pursue legal challenges to the government orders to allow them to recommence mining operations.