In the short term, questions about reduced demand for stainless steel from China will continue to put pressure on the price of nickel.
As a result, questions about when higher cost producers are likely to shut down will remain a key factor in future prices. In the medium and long-term, the expectation is that low-cost supply will continue, as these larger players wait and see which higher cost producers cannot sustain. The question is, who will make meaningful production cuts first?
Of significant importance, during Q2, 2015, was Indonesia’s recently reaffirmed export ban on nickel, which, had it not have been sustained, would have continued the downward pressure on prices.
LME nickel inventories have continued to decline; however at least for now, remain in a surplus position. Expectations of a deficit are expected for 2016, however markets remain cautious of this. There is an expectation of continued volatility in 2016 prices, as markets wait for production cuts and to see the pace of demand from China.
“Questions about when higher cost producers are likely to shut down will remain a key factor in future prices."
KPMG in Brazil