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Concerns loom large that global nickel production will continue to exceed demand this year, but LME nickel prices held up relatively well at the start of the second quarter. As nickel inventories in LME warehouses dipped to nearly 40,000 tonnes at the end of April, LME nickel prices have been hovering around US$ 24,000 per tonne of late, up from some US$ 22,000 in late March.

There has been considerable speculation about the creation of new exchange-traded nickel contracts. However, the Financial Times reported in April that the CME Group had decided not to launch a new nickel contract. According to Edward Meir of the Marex Group, a new Class 2 nickel contract would be more useful than another Class 1 contract given the increasing share of nickel pig iron and nickel sulfate production and consumption.

According to latest figures from worldstainless, global stainless steel melt shop production declined 5.2% last year to 55.26 million tonnes, including a drop of 14.8% in the USA. Inflation and rising interest rates have curtailed consumer spending on durable goods; indeed, the economic slowdown has severely affected demand for household appliance manufacturers and for the construction sector.

Global stainless steel production levels were still depressed in early 2023, according to Macquarie Research, with output levels not expected to recover until the second half of the year amid reports of excess nickel pig iron inventories in China and loss-making operations in both China and Indonesia. 

For exporters of recycled stainless steel, potential trade restrictions - including the revised EU Waste Shipment Regulation and the potential expansion of the Basel Convention to include metal alloys - continue to weigh very heavily. However, US exports of stainless steel scrap surged 120% year on year during the first two months of 2023 to more than 73,000 tonnes thanks to improved demand from India, Taiwan, Mexico and Canada.