Nickel Surplus Weighs On Stainless Steel Prices

The Stainless Monthly Metals Index (MMI) fell 7.53% from March to April. Downside momentum continued to pressure the nickel market, sending prices down into support zones. Meanwhile, no bullish reversal patterns have formed, leaving the global stainless steel price at high risk of further decline.

Nickel Market Shifted into Surplus, While Inventories Declined

According to the International Nickel Study Group (INSG), the nickel market shifted from deficit to surplus in 2022, and thus the stainless steel price index was effected. Supply overtook demand by 112,000 tons, marking the largest surplus since 2014. A boost in mining and production in Indonesia, which alone accounted for roughly 48% of global nickel output in 2022, significantly supported supply. 

However, the surplus provided little relief for LME inventories, which continued a decline that started in 2020 and now sit at their lowest level since 2007. The class of material is the main reason for the disparity between global supply and inventories. Both the LME and SHFE trade Class 1 refined nickel. However, the boom in Indonesia has largely related to Class 2 material, which impact stainless steel prices.