Still awaiting the rebound

At the close of trading on Friday, April 28, 2017, the value of nickel hit a 10-month low, according to a news report prepared by the Economic Calendar website. The culprit was cited by the website as disappointing first quarter 2017 nickel import figures for China.

The price of nickel subsequently rebounded the next week, along with the value of several other commodities, but the late April situation for nickel is indicative of its struggles to experience a price rebound throughout much of this decade.

For scrap recyclers in particular, the ability of China’s stainless steel mills to rely on nickel pig iron from nearby nations—rather than American or European stainless scrap—has added a second negative factor to the market beyond its pricing.

ON AGAIN OFF AGAIN

Although China has been importing nickel pig iron from both Indonesia and the Philippines throughout this decade, each of those nations also has at times restricted its nickel ore mining activities owing to either environmental reasons or in a bid to attract smelting and refining activity.

The Economic Calendar news item notes that those in the stainless steel and nickel markets has been watching to see if Regina Lopez, the current acting Secretary of the Environment in the Philippines, will be confirmed as the full-fledged secretary. On 3 May, Reuters reported that Lopez’s conformation was rejected, causing the LME price of nickel to drop that day.

According to media reports, Lopez was the one who “ordered the shuttering of 28 of the country’s 41 mining companies earlier in the year due to supposed violations of environmental regulations. She also ended 75 contracts to develop new mines.”

With or without imported stainless scrap, China has become the largest global producer of stainless steel. The ability of its mills to continue to absorb metallic units as feedstock will likely continue to affect the price of nickel throughout 2017 and beyond.

Not all of China’s stainless steelmaking activities are welcome, as indicated by a European Union trade case decided against China and Taiwan in January 2017.

In that case, the European Commission (EC) decided to impose definitive anti-dumping measures on two steel products originating in those two nations. The EC ruled that stainless steel tube and pipe butt-welding fittings had been sold in Europe at dumped prices.

Chinese exports of those two products have subsequently been taxed with anti-dumping duties ranging from 30.7% to 64.9%. Taiwanese exports are facing anti-dumping duties ranging from 5.1% to 12.1%.

Activity in China has affected the stainless scrap markets around the world, as reported by numerous recyclers who prepare reports for the Brussels-based Bureau of International Recycling (BIR) World Mirror publication.

TO SERVE AND PROTECT

In the February 2017 edition of the World Mirror on Stainless Steel & Special Alloys, recyclers from around the world mentioned protectionism, Indonesia’s return to the nickel pig iron market and the newly inaugurated Trump Administration in the United States as factors affecting the market in early 2017.

In the U.S., “Stainless steel mill order books, by all reports, are good and are anticipated to improve,” write Rick Dobkin of Shapiro Metals and Barry Hunter of Hunter Alloys LLC in their report. “There is certainly additional production capacity available at these mills, and any opportunity to increase production would be welcomed and met,” they add.

Among the positive factors in the U.S., according to the duo, are potential positive aspects for manufacturers from the Trump Administration. “President Trump has promised to protect U.S. industry and jobs, and to spend a large amount on improving infrastructure,” they write. “He has proposed large import duties and trade tariffs where he believes U.S. interests are at risk.”

BIR Stainless Steel & Special Alloys Committee Chair Joost van Kleef of Netherlands-based Oryx Stainless B.V. writes, “Europe’s crude stainless output significantly increased in the fourth quarter of 2016, as a result of which total output for the year is expected to be 3% higher than in 2015. In light of positive economic growth forecasts for most regions, stainless producers in Europe remain optimistic about production volumes in 2017. Therefore, good demand for stainless scrap is expected.”

However, van Kleef also expresses concerns about protectionist movements around the globe, writing, “Most producers fear the possible negative effects of protectionism on any growth scenario.”

Among the protectionist measures mentioned by other contributors is a “US$ 70 per tonne export fee on steel, stainless steel and alloy steels” enacted in Jordan, according to Ahmad Sharif of Metals Bank Co. Ltd. in that nation.

Ildar Neverov of the Russia-based Tyor Group says traders in that nation are mindful that “stainless steel scrap is a strategic metal listed as one of the most important industrial goods.” He adds, “The Russian

government has created a special list of goods that can be prohibited for export by a single signature. The current duty of 7.5% allow the export of scrap and, from time to time, the international market is more competitive for Russian suppliers of high-nickel grades.”

World Mirror contributor Uwe Dierkes of Germany-based Siegfried Jacob Metallwerke GmbH & Co KG circles back to the nickel pig iron situation when considering the recent fortunes of the nickel-bearing scrap market and the value of nickel. Even before the Lopez vote in the Philippines, Indonesia made moves to add supply to the nickel ore market.

“With regard to the nickel market, a steady increase in the fourth quarter of 2016 to an average of US$10,809 per tonne seems to have corrected itself in January 2017, with a nickel average at the time of writing of US$ 9,850 per tonne,” he writes. “This drop in the nickel price coincides with Indonesia reversing its export ban on the unprocessed mineral, and this could lead potentially to a flood of material into the market and a further weakening of nickel’s value.”

Summarizing nickel’s prospects for 2017, Jacob foresees the same question marks that have confronted recyclers throughout this decade. “Going forward, we are cautiously optimistic that the increase in demand witnessed recently will continue in the months ahead. The level of uncertainty remains high, however, as the same risks are still apparent, with currency and volatile commodity prices the main factors.”

The author is editor of Recycling Today Global Edition and can be contacted at btaylor@gie.net.