16 February 2017

PRICE FOCUS: Nichel & Extra Lega AISI 304

Here are some considerations that suggest that the alloy surcharges values considerably grew in the second half of 2016 are intended to be kept for at least the first half of 2017:

The nickel is between 10,000 and $ 10,500 and the dollar is moving in the range 1,04 to 1,07, this resulting in a variation in absolute value of approximately 20/25 euro/ton, so a very small range. The nickel value remains in our opinion always quite low, and even the recent setback of Indonesia with regard to all ‘export limits, has had a particularly depressing effect (if not for a few hours where the nickel touched $ 9,800 before rising). Do not forget that in February 2016, the nickel values were among the lowest in the last 10 years, with minimum to $ 7,800 / ton and dollar values to 1,10. Today the share at $ 10,250 with the dollar at 1.05 justifies a considerable increase in the alloy extra value.

Different is instead the issue of enhancement of ferrochrome, another important component of the extra value of alloy, which is in fact the “superstars” of the Christmas period. The sale of the chromium values were given, so to say, the impression of being out of control. The extra daily alloy values have rocketed up to 1,560 euro/ton for 304, and it would have created an additional step on the final price, more and more distant from the reality of the prices of the first/second half of 2016. In practice the ferrochrome we need about an increase of more than 200 € /ton of AISI 304 alloy, a very strong push (do not forget that the metal was sold in March-April 2016 about 2,00 € for 2mm 2B and 200 euro to ferrochrome are approximately 10% increase).

Another important problem related to the increase in ferrochrome value is the boost given to the extra values of the AISI 430 alloy which are sketched, in the daily rate, to more than 800 €/ton. In short, then the prices of basic metal 2,00 will rise up to 1.75-1.80, as already detectable still on the market. E ‘in these moments that we realize the “wicked” policy of some producers in the first half of 2016, they are exposed quotes to end users, also related interest, up to bases around 1.30. Now for these users, contractors often, we talk about important increases on poor products such as 430, often chosen only for its characteristic of lower risk of price fluctuation.

Situations such as the closure of the Bochum OUTOKUMPU casting, the introduction of duty on cold rolled plans Chinese and Taiwanese, despite a question that remains satisfactory, generate tension and uncertainty on ‘price trend.

In this context we believe that the prices will go back very difficult, in the sense of returning to the stock prices of the first half of 2016. Given that the stock of the AISI 304 will have to walk around, if the alloy surcharge value for February 2017 will be like in the forecast above, around 2.70 for sheet basis 2.00, maybe a step back of ferrochrome values will depress prices again, maybe between 2.35 and 2.45 but not in the short and do not think at lower altitudes. It is also not excluded that the nickel restart a climb path, as the forecast for 2017 would see around $ 12,500 for which might happen even the opposite of what has just been said above, with further increases compared to current prices.