Nickel bull looks at $25/lb
Some mills market Nickel Light steels
By Tom Stundza -- Purchasing, 4/27/2007 1:43:00 PM
The weekly average price of nickel slipped by barely 3¢/lb to $22.71 on Friday despite earlier speculation that makers of stainless steel, the biggest users of the metal, might reduce orders to cut costs. Nickel has risen steadily by 36% since January with the April month-to-date price average on the London Metal Exchange at $22.73 because of surging demand from China, the world's largest user.
With LME nickel inventories at critically low levels and extremely volatile (up 45% since the recent low in early February) the nickel price has exceeded virtually everyone’s expectations—and wiped away earlier estimates of the $16 annual average price. Nickel, used in stainless steel, may surpass this year's record of $50,200 a ton ($22.77) as supplies lag behind demand, Standard Bank analyst Mike Skinner said in an interview this week in Mumbai. The metal price may rise above $55,000 ($24.95), he said.
Posco, the world's fourth-largest steelmaker, said this week it will increase output of a nickel-free stainless- steel product fivefold by next year after the price of the metal rose to a yet-another record high. The South Korean steelmaker says its nickel-free stainless steel at $2,482/ton will cost 47% less than austenitic-grade 300-series stainless steel cold-rolled sheet.
This new steel uses chromium and supports the efforts of stainless steel producers and users struggling to cover costs as the prices of nickel have risen from January’s average of $16.69. The increase has prompted steelmakers to step up the search for alternatives, while mining companies have attempted to locate new sources of supply.
Meanwhile, here in the U.S., some stainless steel producers already are switching to lower-nickel stainless steels such as 201-series High Performance made by Allegheny Ludlum Steel of Pittsburgh. “With nickel prices surging to record highs nearly every week, stainless steel customers have begun to alleviate the sting of higher costs,” analyst Mike Gambardella at J.P. Morgan Securities in New York writes today to clients. He says the Allegheny Ludlum product (AL2003) contains only 3% nickel versus Type 316 stainless that contain 10% nickel “while offering virtually the same structural properties at a much lower price.”
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