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  • BIR Copenhagen 2024 - Stainless Steel & Special Alloys Committee: LME welcomes evidence of nickel contract “coming back to life”

BIR Copenhagen 2024 - Stainless Steel & Special Alloys Committee: LME welcomes evidence of nickel contract “coming back to life”

  • 31 May 2024

Debate surrounding the role of the London Metal Exchange (LME) intensified in March 2022 when nickel trading was suspended for eight days, leading to a steep drop-off in futures market open interest and overall volumes. However, there were now clear signs of “a return to normality” on the LME, it was argued at the latest meeting of the BIR Stainless Steel & Special Alloys Committee chaired by Joost van Kleef of Netherlands-based Oryx Stainless BV.

Alberto Xodo, LME Product Specialist for Steel & Nickel and a member of the LME Nickel Committee, revealed to delegates in Copenhagen on May 27 that “liquidity has returned to the contract”. Open interest “has started rising again” over the last six months and was now close to March 2022 levels while overall volumes “are also coming back”. And following an early disconnect in the wake of the suspension, convergence had been restored between prices on the LME and the Shanghai Futures Exchange.

The turnaround reflected not only “the value companies attach to protecting themselves” but also the measures put in place by the LME to prevent a repeat of the situation in 2022, including the introduction of 15% upper and lower daily price limits for all metals. A lot of work had been done to regain trust, especially from recyclers, “and the contract seems to have come back to life”, said Mr Xodo.

The Copenhagen session also featured a presentation from Yuriy Vlasov, Senior Analyst for stainless steel at CRU, in which he noted that stainless steel accounted for a 15% share of total steel scrap demand by revenue despite its significantly smaller volumes when compared to carbon steel.

Having indicated that demand for stainless scrap was recovering to pre-pandemic levels, Mr Vlasov contended that China and Indonesia would be the drivers behind a projected 3.9% compound annual growth rate for stainless slab production in the period from 2023 to 2028. Europe and North America would be “relatively stable”, he added.

Stainless scrap would continue to experience “very strong demand” in the USA and Europe whereas emerging markets would rely more on other raw materials, according to Mr Vlasov.

Also in Copenhagen, a summary of the latest BIR World Mirror on Stainless Steel & Special Alloys was provided by Doug Kramer of US-based Spectrum Alloys LLC. He highlighted worldstainless figures for 2023 showing that China was responsible for 36.7 million tonnes of the 58.4 million tonnes of global stainless steel melt shop production last year, easily outstripping the totals for Europe and the USA of, respectively, 5.9 million tonnes and 1.82 million tonnes.

Demand for stainless steel scrap from mills in Taiwan had weakened further in this year’s first quarter as imports of hot coil had returned to the substantial 2023 average of approximately 75,000 tonnes per month. Meanwhile, mills in India were looking to rebuild their low raw material inventories and had resumed booking scrap cargoes in recent weeks, the speaker reported.

Europe’s crude stainless production had been hit by major strikes and so scrap prices had not gained significant ground despite scarce supply and higher LME nickel values, Mr Kramer continued. Overall mill demand for stainless scrap had been robust during the first quarter in Europe, with the EU recording a year-on-year increase of more than 50% in net imports from third countries across the opening two months of 2024.

Demand for superalloy scrap remained strong, delegates were also told, while cobalt prices had been in decline owing to oversupply.