Nickel
Prices Recover
September 2017
The LME nickel price for August averaged US$10,890/t (US$4.94/lb), up an impressive 14.7% on the July average. The price recovery from a mid-June low of US$8,739/t (US$3.96/lb) increased in pace in August, following 6.3% month-on-month price growth seen in July.

Over August, prices rose steadily from US$10,241/t (US$4.64/lb) to finish the month at a high of US$11,740/t (US$5.33/lb). This rapid increase in price has offered hope to many struggling producers.  

Over August, combined exchange stocks (LME and SHFE) rose 10.7kt to 452.3kt. Falls of 5.6kt on the SHFE to 63.1kt partly offset a very significant rise in the LME inventory of 16.2kt to 389.2kt. This is the highest level that LME stocks have reached since June 2016. This increase in exchange stocks does not provide any support for rises in the nickel price. Exchange stocks of nickel remain at very high levels, containing over eleven weeks of annual nickel demand. This is very high compared to other metals, with current zinc exchange stocks making up only one week of forecast refined demand for this year.

Stocks of imported nickel laterite stored at Chinese ports sat around 9.5Mt over August. Medium to high-grade ore stocks decreased by around 0.14Mt while low-grade stocks climbed 0.22Mt to 3.3Mt, with low-grade stocks making up 35% of total port stocks. Stock levels have remained relatively flat over the last two months following a rise in the June Quarter, when ore started to flow to China following the end of the wet season which interrupts most Philippine ore exports. However, the flatness seen in port stock levels over the last two months, a period where stocks typically increase, points to Chinese demand outstripping supply which grew over 12% year on year for July to 3.7Mt. With over half of this monthly increase (0.23Mt) attributable to Indonesian ore starting to flow into China with the relaxation of its ore export ban, Indonesian exports into China are expected to increase in coming months to around 0.7Mt per month.