Nickel Volatility Sends Stainless Steel Market in Chaos

Following Russia’s invasion of Ukraine and the ensuing nickel volatility and trading issues in the London Metal Exchange (LME) left the stainless steel market in uncertainty. After the initial interruption earlier in March, nickel trading in the LME has remained turbulent.

The stainless steel industry has already been dealing with high prices of raw materials and soaring energy prices. Now, the market is trying to assess the impact of Russia’s invasion of Ukraine. The events that led the LME to suspend nickel trading on March 8 left stainless steel prices in chaos as well.

Stainless steel supply chain were uncertain when the suspension would end, trading would resume and at what prices. Nickel price volatility creates considerable uncertainty for stainless steel buyers as nickel is an important part of both the European and U.S. alloy surcharge calculations.

As a result, stainless steel manufacturers had to withdraw their quotations and stop accepting new orders. Asian export offers to European buyers were also suspended because of price uncertainty. Some suggested that they could attempt to postpone mill deliveries, due in April, to avoid the spike in alloy surcharges. Furthermore, with such turbulence, service centrers and distributors have lost willingness to place orders.

Conversely, panic led to high purchasing activity among the end user sector. Some sellers had to suspend their e-commerce systems fearing they would run out of material. However, resale values have fluctuated as service centers and distributors don’t know what price to sell. Selling values for 304 cold rolled sheet varied between €5.20 per kg and €7.00 per kg across Europe.

Since the chaos on March 8, the LME has published several new rules in an attempt to restore normality to nickel trading. European stainless steel producers were able to calculate and publish their April alloy surcharges following weeks of uncertainty. Outokumpu’s stainless 304 flat product surcharge jumped to €3251 per tonne, an increase of more than 20% month on month and a thirteen-year high.

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