LME nickel has experienced a significant decline since the beginning of the year, dropping over 40% from earlier highs of US$ 28,000 per tonne to around US$ 18,500 at the time of writing.
Several factors have contributed to this downturn. The anticipated recovery of the Chinese economy, a crucial player in the global market, has been notably slower than expected. Additionally, the market has been grappling with mounting global inflationary pressures and the surge in oil prices, which have collectively impacted the nickel industry. Stainless steel production - which accounts for over two-thirds of total nickel demand - has experienced a slowdown that has duly curbed nickel consumption.
Furthermore, the depreciating nickel, flat chrome and niobium markets have been exerting downward pressure on Inconel scrap values. Inconel 718, primarily consumed by the aerospace industry, has been a standout. Supply constraints have led to a tightening of availability, even as aerospace programmes gear up to address long, narrow-body backlogs. Some grades of Inconel have experienced a more gradual decline in scrap prices compared to others. This phenomenon can be attributed to the occasional lag between scrap generation rates and renewed demand, which often proves temporary.
In the bigger picture, the superalloy market’s fundamentals remain robust, with sustained growth projected over the coming years. To adapt to higher inflation, especially for high-value superalloys like Inconel 625 and 718, numerous consumers have managed to increase revenues by reducing processing costs and revising pricing strategies.
Superalloy demand remains resolute despite ongoing challenges, with manufacturers eagerly accepting orders. However, many find themselves operating at full capacity, leading to extended lead times.
The aerospace sector has encountered supply chain disruptions. Boeing, for instance, is facing delays in its delivery schedule owing to these issues, with its backlog now standing at 4971 aircraft. Airbus has surged ahead with an impressive backlog of 8024 aircraft, averaging 117 deliveries per month. These backlogs underscore the sustained demand for aerospace alloys in the foreseeable future.
The diverse range of elements within the superalloy family reflects the complexity of the materials market. Chromium remains steady, showing resilience in the face of market fluctuations. Molybdenum has seen a slight uptick, particularly in its oxide form, but scrap has become increasingly challenging to source. Cobalt is maintaining stability and even experiencing a slight upward trend while niobium, like chromium, remains steady in its market performance.