[Ferro-Alloys.com] Stainless and nickel price trends fluctuated much more than carbon steel throughout 2022. The LME nickel squeeze greatly strained both the nickel and stainless steel markets. Indeed, LME nickel prices skyrocketed by almost $25,000 per metric ton back in March. Soon after, the rally cooled down again, eventually bottoming out in July. Come November, prices bounced back up, leaving markets a bit unsure of what to expect in 2023.

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Nickel Price and Stainless Trends: Q1

The stainless and nickel price index began the year by edging up a slight 1.8%. With prices rising, buyers began pushing up their stock levels. Russia was also surrounding Ukraine, preparing for what appeared to be a full-scale invasion. Knowing such an event would dramatically affect nickel markets, buyers and sellers began watching the situation very closely.

In mid-January, LME inventories began plummeting. This led to the nickel price index surging to an 11-year high. The lack of inventory caused prices and surcharges to skyrocket. By March, the LME suspended nickel trading completely for several days. The average nickel price blew through the roof to nearly $50,000 per metric ton within only a few hours. Buyers everywhere panicked, and purchased as much nickel as possible to save their own inventories. Also, Russia had carried out its invasion of Ukraine in February. By March, Russian nickel and other Russian industrial metals became subject to serious sanctions due to the unprovoked, brutal invasion. The nickel market appeared grim.

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Q2: The Rally Cools Down

After a staggering 25.1% increase in the stainless and nickel price index, things began to cool from March into April. Nickel trading finally resumed on the LME following the historic short squeeze, which saw nickel prices spike by more than 90% in mere hours. By May, prices had begun to recede a little bit.

However, in June, the LME nickel contract continued to lack liquidity. This harmed price discovery, making it more and more difficult to track prices. In turn, many buyers encountered issues mitigating price risk. Despite all this, prices were finally starting to consolidate.

Stainless and Nickel Price Trends: Q3 of 2022

July’s stainless and nickel price index came as a bit of a shock. Prices were showing sudden weakness with no apparent bullish anticipation. In total, prices dropped by 9.55%.

The nickel price index itself would remain damaged for months. In fact, it continued to slide in August, dropping by 8.86%. However, long-term trends soon began to look bullish again. One of the main factors was Indonesia announcing it would place taxes on nickel pig iron and ferronickel exports.

Indeed, in September, prices began flattening a bit. However, a new problem also presented itself: too much inventory. Stainless cold rolled imports rose continuously throughout 2022, peaking between April and June. Buyers purchased en masse after the March LME nickel squeeze.

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Q4: Nickel Prices Bounce

In October, the stainless and nickel price index rose by 3.35%. This brought nickel to about $21,000 per metric ton on the Nickel LME Primary 3 Month. By November, nickel and stainless began rallying again. However, suppliers remained flush with inventory.

In December, prices appeared bullish yet again, with a 7.3% rise in the index. This leaves the 2023 Q1 price outlook appearing more bullish than bearish. And while volumes are steady at the moment, nickel contracts are historically volatile. We saw this proved throughout 2022. Therefore, prospective buyers should keep all eyes on price forecasting to mitigate price risk.

• [Editor:tianyawei]