Research

Forecasts and market analysis based on price assessments from Fastmarkets MB and Fastmarkets AMM

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August 2018 | Base Metals


Nickel: Dip buyers around


Nickel is showing some decent dip-buying interest this week after being dragged down to a new 2018 low last week by broad trade war worries. We maintain that this market’s robust fundamental backdrop and long-term bullish appeal, stand it in good stead to be relatively resilient during this weak period and be a leader on the upside when risk appetite returns.

Last week we noted the latest stainless steel production data from China that showed 300 series had significantly underperformed total stainless in H1. Our Stainless Steel Markets Tracker, published in the last few days explains that this is down to poor conversion margins for 300 series producers relative to 400 series producers. But conversion margins on 300 series have been recovering in recent weeks and have moved back above historical averages. Indeed, by the final week of July our real-time conversion margin estimate for a producer selling in the Wuxi market had recovered to $544 per tonne for cold-rolled (CR) 304 2mm coil after falling below $500 per tonne for the first time in a year. In a sign that the margin recovery was driven by production restraint rather than improving demand, prices have continued to fall; just not by so much...

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