Nickel Rebounds as Indonesian Supply Cuts Loom; US Steel Prices Surge 40%

The US steel market is tight, with hot-rolled coil costing a good 40 per cent more than a year ago. Mills are now dictating prices and volumes in a seller’s market. Four trading days, four gains: Nickel prices have risen significantly again in recent days.

Nickel prices at LME and SHFE turn higher

Four trading days, four gains: Nickel has pulled away from its nine-month low reached last Thursday and gained almost 3 per cent on the LME by 20 October. Today, it opened up a further 1.68 per cent and jumped above USD 16,000 per tonne.

In Shanghai, the most-traded nickel contract gained 1.89 per cent over the same period and improved by more than 3 per cent again on Wednesday.

What triggered the rise

China’s largest producers, including Tsingshan, GEM, Lygend and Huayou, are discussing coordinated production cuts at their Indonesian HPAL plants, according to a Bloomberg report. Reductions of around 30 per cent per company are reportedly under discussion.

Pressure on producers is currently high: falling prices, high costs and restricted water availability. A reaction from nickel producers to the current situation had been expected.

United States: Steel only available on allocation?

America’s steel buyers are currently facing a seller’s market. Demand is holding up, supply remains tight and prices are rising much faster than available capacity. Quarterly reports from US mills show how this situation has developed.

Customers running on empty inventories

Steel Dynamics describes demand as stable. Customer inventories are at the lower end of the historical range, while available spot volumes for flat and long products are becoming scarce. The company is talking about lead times extending well into 2027.

Q4: Maintenance outages remove up to 1.2 million tonnes from the market

According to Steel Dynamics estimates, the industry operated at around 80 per cent capacity utilisation in the third quarter. Maintenance outages are set to remove up to 1.2 million tonnes from the market in the fourth quarter.

Cleveland-Cliffs also intends to keep its Dearborn blast furnace idled until customers commit to firm volumes.

Price increases almost every week

According to Kallanish, hot-rolled coil cost around USD 1,215 per short ton at the beginning of October, a good 40 per cent more than a year earlier.

Nucor most recently raised its weekly price to USD 1,240, while Steel Dynamics CEO Mark Millett has announced further increases. Fixed-price contracts that Cliffs had concluded at around USD 800 will, according to the company, be reset at USD 1,150 or more in 2027.

CEO Lourenço Goncalves also wants minimum purchase volumes to become payable commitments.

Capacity expansion, yes, but only slowly

High prices are attracting investment. Steel Dynamics is expanding Sinton to 250,000 tonnes per month, while Nucor will not bring its new West Virginia plant online until sometime in 2027.

How quickly supply catches up will determine how long buyers have to purchase on the mills’ terms. In the short to medium term, there is therefore unlikely to be any easing in the US steel market.

Courtesy : https://steelnews.biz/